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Quick Revision OF Hypothesis Testing Process
BU SINESS STATISTICS I HYPOTHESIS TESTING
SY B.COM SEM I
-Prof. Dinesh Barot
Fundamental rule for construction of sample for statistical inferential study
The sample must be a complete representative of a population with regard to the question of interest.
The principal way to guarantee that the sample data represents the population is to use a random sampling.
Test statistic is a ratio of difference of Sample statistic and Null value of Parameter to Standard error of sample statistic, i.e.
Test statistic =
The value of test statistic that separates the rejection region from the acceptance region in such a way that the rejection region contains a total area of and the acceptance region contains a total area of (1- ) when H0 is true.
p – value:
Probability of getting a test statistic Z that is equal to or more extreme than, the observed test statistics value, given that the null hypothesis is true
The Decision rule is a statement of the specific conditions under which the alternative hypothesis is accepted or rejected. There are mainly two types of decision rules:
Rejection value Rule:
If |test statistic| > Rejection value, then accept H1 otherwise reject H1
p - value Rule:
If |test statistic| < , Accept H1 otherwise reject H1 .
Hypothesis Testing Procedure
The basic structure of hypothesis testing to test the alternative hypothesis is as follows.
Identify the target population, sample, statistical test and test statistic.
State the Null hypothesis and Alternative hypothesis.
Compute the value of Test Statistics using the available sample information.
Obtain the critical value and at the given significance level.
Make a decision regarding the acceptance or rejection of alternative hypothesis using an appropriate decision rule.
Write a brief report.