Hypothesis Testing and Decision Making

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What are the objectives of Hypothesis Testing?

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1. Understand the terms used in Hypothesis Testing. 2. Differentiate the methods of hypothesis testing: traditional method, p-value, and confidence interval. 3. State the alternative (H1) and null hypotheses (H0) and explain the relationship between them. 4. Compare and contrast one-tailed test and two-tailed test. 5. State the steps used in hypothesis testing.

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What is the region of rejection in hypothesis testing?

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The region of rejection contains means that are so unlikely to represent the underlying population that we reject the idea that they represent that population.

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What is the criterion probability in hypothesis testing?

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The criterion probability defines samples as too unlikely for us to accept as representing a particular population.

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What is the critical value in hypothesis testing?

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The critical value of z defines the minimum value of z a sample must have in order to be in the region of rejection.

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What is the rejection rule in hypothesis testing?

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When a sample’s z-score lies beyond the critical value, reject that the sample represents the underlying raw score population. If the z-score does not lie beyond the critical value, retain the idea that the sample may represent the underlying raw score population.

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What is the difference between one-tailed and two-tailed tests?

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One-tailed tests are directional and test for means that are either less than or greater than a given value. Two-tailed tests are non-directional and test for means that are not equal to a given value.

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What are Type I and Type II errors in hypothesis testing?

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Type I error is rejecting H0 when H0 is true. Type II error is retaining H0 when H0 is false (and Ha is true).

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What is the power of a statistical test?

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The power of a statistical test is the probability of rejecting H0 when H0 is false.

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What are the steps in hypothesis testing?

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1. State the problem and hypotheses. 2. Determine the critical value. 3. Compute the appropriate statistical treatment. 4. Make a decision. 5. Draw a conclusion.

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What is the z-test?

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The z-test is the procedure for computing a z-score for a sample mean on the sampling distribution of means.