What Is a Hypothesis?

A hypothesis is a statement about a population. Data are then used to check the
reasonableness of the statement.

State the Null Hypothesis and the Alternate Hypothesis

Select a Level of Significance

Select the Test Statistic

There are many test statistics. In this chapter, we use both z and t as the test statistic.

Formulate the Decision Rule

Make a Decision

IMP

Finding critical value of z:

normsinv
If you enter 0.975 , your output is 1.96 (rounded)
z a/2 -- Do you mean a two-tailed z value with a level 0.05?
Then, subtract a/2 from 1. Enter that probability in Excel and read the output below.
Example:
z 0.01/2 = z .005
Enter 0.995 and read off 2.5758

IM

A One-Tailed Test

p-Value in Hypothesis Testing

Calculating P-value
These areas and the p-value can be found in Excel using the NORMSDIST(-3) function, in the z-table, or with the Excel utility provided

In the below case the area can be found by using excel NORMSDIST(-1.55) for NORM.S.DIST(-1.55,true(cumulative distribution
funcation

2*(.0606)=.1

Confidenc
e level is
increasin
g

Super imp
But the p-value 0.0027 is much smaller than 0.05. Thus, we can reject the null hypothesis at
0.0027, a much lower significance level. In other words, we can reject the null hypothesis with
99.73% confidence. In general, the lower the p-value, the higher our confidence in rejecting the
null hypothesis.

Testing for a Population Mean:

Population Standard Deviation Unknown

a one-tailed area of 0.05 with 39 degrees of freedom:

The right function is TINV(), but the problem is that TINV() assumes that you're inputting the two-tailed
probability, not the one-tailed probability.

Thus if you want TINV() to give you the critical value associated with a one-tailed probability, you have to
double the probability first to account for the other tail. Thus, for example, TINV(0.1,39)yields an output
of 1.684875122, which is the critical value you want.

10.9 Tests Concerning Proportions

TYPE 1 and Type 2 errors from book