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What are the five steps of a test of hypothesis using the critical value approach? Explain briefly,

Short Answer

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The five steps of a test of hypothesis using the critical value approach are: 1) stating the null hypothesis 2) stating the alternative hypothesis 3) determining the test statistic 4) determining the critical value 5) comparing the test statistic and critical value to reject or not reject the null hypothesis.

Step by step solution

01

State the null hypothesis

The null hypothesis, denoted \(H_0\), is a statement about the population that to some extent is believed to be true. This usually represents the status quo or a theory that researchers want to test.
02

State the alternative hypothesis

The alternative hypothesis, denoted \(H_1\) or \(H_a\), is the statement that will be accepted if the evidence provided by the sample data is conclusive enough to reject the null hypothesis.
03

Determine the test statistic

In this step, a test statistic is calculated from the sample information. This statistic provides a basis for comparison and determines if the null hypothesis should be rejected or not. The form of the test statistic depends on the nature of the population (normally distributed, binary, etc.) and the parameters under investigation.
04

Determine the critical value

In the critical value approach, you compare your test statistic to a critical value that depends on the significance level (\(\alpha\)) chosen for your test. If it is greater than a critical value, the null hypothesis is rejected.
05

Compare the test statistic and critical value

If the test statistic is beyond the critical value in the domain specified by the alternative hypothesis, the null hypothesis is rejected in favor of the alternative. Otherwise, there is insufficient evidence to reject the null hypothesis.

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Null Hypothesis
Understanding the null hypothesis is fundamental in hypothesis testing. It is denoted by the symbol \( H_0 \). The null hypothesis is like the baseline or default assumption about a population parameter that you want to test. It's the statement assumed to be true unless there's substantial evidence against it.
For example, if we're assessing a new drug, the null hypothesis might be that the drug has no effect, i.e., it performs the same as no treatment at all. From a statistical standpoint, the null hypothesis often posits no effect or no difference.
When we conduct a hypothesis test, we're often looking to gather evidence that challenges the null hypothesis. Remembering that the null hypothesis is the status quo can help you understand why it needs to be disproven rather than proven.
Alternative Hypothesis
The alternative hypothesis is the complement of the null hypothesis. Denoted by \( H_1 \) or \( H_a \), this hypothesis introduces a notion contrary to the null hypothesis. It suggests that there is indeed an effect or a difference in the population parameter being studied.
A well-formulated alternative hypothesis provides a clear answer to the question being studied. It tells us what statement we should be ready to accept if the test statistic indicates significant results.
Consider a situation where you suspect a coin is not fair. The null hypothesis \( H_0 \) would say the coin is fair, while your alternative hypothesis \( H_1 \) would suggest it's biased. Using sample data, your aim is to find strong evidence against the null hypothesis to consider the alternative hypothesis true.
Test Statistic
The test statistic plays a crucial role in hypothesis testing, serving as a decision-maker about the null hypothesis. It is a standardized value calculated from the sample data that allows us to determine whether there's sufficient evidence to reject the null hypothesis.
The nature of the test statistic depends on the type of data and the test being performed. Common examples include the z-statistic for large sample sizes from a normally distributed population and the t-statistic for smaller sample sizes.
To compute the test statistic, we use the sample data to measure how far the sample mean is from the hypothetical population mean postulated in the null hypothesis. The bigger the test statistic, the lower the likelihood the null hypothesis is true.
Critical Value
The critical value is a threshold that the test statistic is compared against in the hypothesis test. It is determined based on the selected significance level (\( \alpha \)) which represents the probability of rejecting a true null hypothesis.
Critical values mark the boundary or cutoff region where the null hypothesis is rejected. If the computed test statistic falls into this region, we reject the null hypothesis. The critical value can be found using statistical tables, software, or calculators, depending on the distribution of the test statistic.
For example, with a significance level of 0.05 in a two-tailed test, the critical value might cut off the outer 5% of the normal distribution, indicating that a test statistic beyond this point is unlikely under the null hypothesis.
Significance Level
The significance level, denoted by \( \alpha \), is a probabilistic threshold in hypothesis testing that defines the strength of evidence required to reject the null hypothesis. A common choice is \( \alpha = 0.05 \), meaning a 5% risk of incorrectly rejecting the null hypothesis if it's actually true.
This level reflects how "willing" we are to make a Type I error, which is mistakenly rejecting a true null hypothesis. Lower significance levels indicate a more stringent test; the evidence must be more substantial to reject the null hypothesis.
Choosing the significance level is a key decision in the hypothesis testing process, usually determined before conducting the test. It directly influences the critical value and, consequently, the decision about the null hypothesis.

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Most popular questions from this chapter

Which of the two hypotheses (null and alternative) is initially assumed to be true in a test of hypothesis?

For each of the following examples of tests of hypothesis about \(\mu\), show the rejection and nonrejection regions on the \(t\) distribution curve. a. A two-tailed test with \(\alpha=.02\) and \(n=20\) b. A left-tailed test with \(\alpha=.01\) and \(n=16\) c. A right-tailed test with \(\alpha=.05\) and \(n=18\)

Customers often complain about long waiting times at restaurants before the food is served. A restaurant claims that it serves food to its customers, on average, within 15 minutes after the order is placed. \(A\) local newspaper journalist wanted to check if the restaurant's claim is true. A sample of 36 customers showed that the mean time taken to serve food to them was \(15.75\) minutes with a standard deviation of \(2.4\) minutes. Using the sample mean, the joumalist says that the restaurant's claim is false. Do you think the journalist's conclusion is fair to the restaurant? Use a \(1 \%\) significance level to answer this question.

According to a 2014 CIRP Your First College Year Survey, \(88 \%\) of the first- year college students said that their college experience exposed them to diverse opinions, cultures, and values (www. heri.ucla.edu). Suppose in a recent poll of 1800 first-year college students, \(91 \%\) said that their college experience exposed them to diverse opinions, cultures, and values. Perform a hypothesis test to determine if it is reasonable to conclude that the current percentage of all firstyear college students who will say that their college experience exposed them to diverse opinions, cultures, and values is higher than \(88 \% .\) Use a \(2 \%\) significance level, and use both the \(p\) -value and the critical-value approaches.

The past records of a supermarket show that its customers spend an average of \(\$ 95\) per visit at this store. Recently the management of the store initiated a promotional campaign according to which each customer receives points based on the total money spent at the store, and these points can be used to buy products at the store. The management expects that as a result of this campaign, the customers should be encouraged to spend more money at the store. To check whether this is true, the manager of the store took a sample of 14 customers who visited the store. The following data give the money (in dollars) spent by these customers at this supermarket during their visits. \(\begin{array}{rrrrrrr}109.15 & 136.01 & 107.02 & 116.15 & 101.53 & 109.29 & 110.79 \\ 94.83 & 100.91 & 97.94 & 104.30 & 83.54 & 67.59 & 120.44\end{array}\) Assume that the money spent by all customers at this supermarket has a normal distribution. Using a \(5 \%\) significance level, can you conclude that the mean amount of money spent by all customers at this supermarket after the campaign was started is more than \(\$ 95\) ? (Hint: First calculate the sample mean and the sample standard deviation for these data using the formulas learned in Sections \(3.1 .1\) and \(3.2 .2\) of Chapter 3 . Then make the test of hypothesis about \(\mu .\) )

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