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Critical-Value Approach to Hypothesis Testing

# Critical-Value Approach to Hypothesis Testing

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CPA involves drawing a network diagram that indicates the shortest possible time in which a project can be completed. The activities − that must be completed to achieve this shortest time − make up what is known as the critical path.
CPA involves drawing a network diagram that indicates the shortest possible time in which a project can be completed. The activities − that must be completed to achieve this shortest time − make up what is known as the critical path.

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10/09/2013

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Subject: Statistics

Critical-Value Approach to HypothesisTesting
We often use inferential statistics to make decisions or judgments about the value of a parameter,
such as a population mean. For example, we might need to decide whether the mean weight, μ, of
all bags of pretzels packaged by a particular company differs from the advertised weight of 454
grams (g), or we might want to determine whether the mean age, μ, of all cars in use has increased
from the year 2000 mean of 9.0 years. One of the most commonly used methods for making suchdecisions or judgments are to perform a hypothesis test. With the critical-value approach to hypothesis testing, we choose a
cutoff point
(or cutoff points) based on the significance level of the hypothesis test. The criterion for deciding whether toreject the null hypothesis involves a comparison of the value of the test statistic to the cutoff point(s). The set of values for the test statistic that leads us to reject the null hypothesis is called therejection region. The set of values for the test statistic that leads us not to reject the null hypothesisis called the non-rejection region. The value of the test statistic that separates the rejection andnon-rejection region (i.e., the cutoff point) is called the critical value.Suppose that a hypothesis test is to be performed at
the significance level α. Then the critical value(s) must be chosen so that, if the null hypothesis is true, the probability is α that the test
statistic will fall in the rejection region. If the value of the test statistic falls in the rejection region,reject the null hypothesis; otherwise, do not reject the null hypothesis.

Rejection region:
The set of values for the test statistic that leads to rejection of the nullhypothesis.

Non-rejection region:
The set of values for the test statistic that leads to non-rejection of the null hypothesis. Any decision we make based on a hypothesis test may be incorrect because we have used partialinformation obtained from a sample to draw conclusions about the entire population. There aretwo types of incorrect decisions. The significance level of a hypothesis test is the probability of rejecting a true null hypothesis. With the critical-value approach, we reject the null hypothesis if

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The Homework solutions from Classof1 are intended to help students understand the approach to solving the problem and not forsubmitting the same in lieu of their academic submissions for grades.
Subject: Statistics

and only if the test statistic falls in the rejection region. The first hypothesis-testing procedure that we discuss is called the one-mean z-test. This procedure is used to perform a hypothesis test for onepopulation mean when the population standard deviation is known and the variable underconsideration is normally distributed. Keep in mind, however, that because of the central limittheorem, the one-mean z-test will work reasonably well when the sample size is large, regardless of the distribution of the variable