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**Introduction to Hypothesis Testing**

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**Definition Hypothesis**

in statistics, is a claim or statement about a property of a population

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**Rare Event Rule for Inferential Statistics**

If under a given assumption, the probability of an observed event is exceptionally small, we conclude that the given assumption is probably not correct.

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**Components of a Formal Hypothesis Test**

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**Null Hypothesis: H0 Statement about value of population parameter**

Must contain condition of equality =, , or Test the Null Hypothesis directly Reject H0 or fail to reject H0

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**Alternative Hypothesis: H1**

Must be true if H0 is false One of three forms: , <, >

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**Note about Forming Your Own Claims (Hypotheses)**

If you are conducting a study and want to use a hypothesis test to support your claim, the claim must be worded so that it becomes the alternative hypothesis. Note about Forming Your Own Claims (Hypotheses)

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Test Statistic a value computed from the sample data that is used in making the decision about the rejection of the null hypothesis For large samples, testing claims about population means the test statistics is: x - µx z = n

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Critical Region (or Rejection Region) Set of all values of the test statistic that would cause a rejection of the null hypothesis Critical Region Critical Region

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Critical Region (or Rejection Region) Set of all values of the test statistic that would cause a rejection of the null hypothesis Critical Region Critical Region

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**Set of all values of the test statistic that would cause a rejection of the null hypothesis**

Critical Regions Critical Region

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**Significance Level of the Hypothesis Test**

denoted by the probability that the test statistic will fall in the critical region when the null hypothesis is actually true The probability of rejecting the null hypothesis common choices are 0.05, 0.01, and 0.10 Significance Level of the Hypothesis Test

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**Conclusions in Hypothesis Testing**

Always test the null hypothesis 1. Reject the H0 2. Fail to reject the H0 need to formulate correct wording of final conclusion Conclusions in Hypothesis Testing

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**The mistake of rejecting the null hypothesis when it is true.**

(alpha) is used to represent the probability of a type I error Type I Error

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**the mistake of failing to reject the null hypothesis when it is false.**

ß (beta) is used to represent the probability of a type II error Type II Error

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**Type I and Type II Errors**

What’s true in Reality The null hypothesis is true The null hypothesis is false Type I error (rejecting a true null hypothesis) Reject the null hypothesis Correct decision Decision based on Hypothesis Test Type II error (rejecting a false null hypothesis) Fail to reject the null hypothesis Correct decision

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**Controlling Type I and Type II Errors**

For any fixed , an increase in the sample size n will cause a decrease in For any fixed sample size n , a decrease in will cause an increase in . Conversely, an increase in will cause a decrease in . To decrease both and , increase the sample size. Controlling Type I and Type II Errors

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© Copyright McGraw-Hill 2004

© Copyright McGraw-Hill 2004

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