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A hypothesis is a statement , an assumption about the nature of the world Hypothesis is a guess With statistical techniques we are able to decide whether or not our theoretical hypotheses are confirmed by the empirical evidence NULL AND ALTERNATIVE HYPOTHESIS Null hypothesis: • Conservative statement that communicates the notion that any change from what has been thought to be true or observed in the past will be due entitrely to random error • True purpose of setting null hypothesis is to provide an opportunity to nullify it. • Null hypothesis is a no difference hypothesis Alternative hypothesis • Alternative hypothesis would be there is difference- i.e it states the opposite of null hypothesis The purpose of hypothesis testing is to determine which of the hypothesis is true PROCEDURE OF HYPOTHESIS TESTING 1. 2. 3. 4. determine statisticsal hypothesis imagine sampling distribution if the hypothesis were true. take actual sample and calculate mean or appropiate statistic We expect some small difference ( although there may be large) between the sample mean and population mean.We then must determine if the deviation between the obtained value of the sample mean and its expected value ( based on the statistical hypothesis) would have occurred by chance alone – say 5 times out of 100- if the statistical hypothesis were true. Statisticians have defined the decision criterion as the significance level. Significance level is a critical probability in choosing between the null hypothesis and the alternative hypothesis
CONFIDENCE INTERVAl/ LEVEL OF SIGNIFICANCE
It is regarded as the set of acceptable hypothesis or the level of probability associated with an interval estimate.. In hypothesis testing, statisticians change their terminology and call this the level of significance (α )
CRITICAL VALUES: The values that lie exactly on the boundary of the region of rejectionare critical values of µ . CRITICAL REGION The region of acceptance is called critical region
TYPE I and TYPE II ERRORS Wecannot make statement about the sample with complete certainity, there is always a chance that error will be made. Researchers run the risk of committting two types of errors. State of null hypothesis in population H0 is true H0 is false Type II error (β ) Accept Ho Correct- no error DECISION Reject H0 Type I Error (α ) Correct-no error
In business problems,TypeI errors are generally more serious than type II errors, There is greater concern with determining the significance level,alpha , than with determining beta.
CHOOSING THE APPROPIATE STATISTICAL TECHNIQUE Choice of appropiate method of statistical analysis depends on1. type of question to be answered 2. the number of variables 3. the scale of measurement
Test of significance proportions and test of significance of mean for large samples. One sample as well as two s amples Test of significance of mean (means) small samples ( one or two) If two could be normal or paired
F-test means) Chi-square test Proportions
Test of significance of homogeneity of several means ( more than two sample Test of significance for proportions ( three or more than three samples