Testing of Hypothesis

Testing of Hypothesis

Properties of Information
Population from Sample
(Parameter) (Statistic)

Statistical
Statistical Inference
inferences

Estimation Testing of
Hypothesis

Point Interval
Estimation Estimation

There are different methods of Point estimation: - (i) Moment method

(ii) Maximum Likelihood method
(iii) Least Square
Interval Estimation is the determination of a range of values within which the numerical
character of the population is very likely to lie.
Like interval estimation, the hypothesis regarding the population parameter is tested on the
basis of the selection of two things
(i) Test statistic
(ii) Sampling Distribution
Four sampling distribution
(i) Z
(ii) T
(iii) Chi-square
(iv) F
Regarding the selection of Test Statistic the clue is obtained from the point estimator of the
parameter on which the test is conducted
Prof. Dipankar Dutta
Dept. of Commerce
Balurghat College
 Testing of Hypothesis

𝑃𝑜𝑖𝑛𝑡 𝐸𝑠𝑡𝑖𝑚𝑎𝑡𝑜𝑟−𝑃𝑎𝑟𝑎𝑚𝑒𝑡𝑒𝑟
TS=
𝑆𝑡𝑎𝑛𝑎𝑑𝑎𝑟𝑑 𝐸𝑟𝑟𝑜𝑟 𝑜𝑓 𝑃𝑜𝑖𝑛𝑡 𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑜𝑟

CONCEPTS RELATED TO TESTING OF HYPOTHESIS

(I) Null Hypothesis: - Denoted by H0 is formed by specifying a single value
for the population characteristics (Parameter) whose test is to be
conducted.
H0: µ = 50 (population mean is 50)
(II) Alternative Hypothesis: - denoted by H1 Alternate to the null hypothesis.
H1: µ ≠ 50, H1: µ > 50, H1: µ < 50
Nature of testing is determined on the basis of H1
H1: µ ≠ 50 Both tailed test
H1: µ > 50 Right tail of the sampling distribution of test statistic
H1: µ < 50 Left tail of the sampling distribution of test statistic

(iii) Test statistics: - Test statistics formula on the basis of which the test is
conducted of course knowing the sampling distribution.
Ex:- to test the population mean the relevant test statistic is

𝒙̅ − µ
provided that population SD is known follows the Z distribution.
𝝈/√𝒏

(iv) Decision Rule: The value of the test statistics is computed under H0 and
this computed value is compared with the tabulated value

Type I Error:- Rejection of True null Hypothesis denoted by ∞

Type Two Error:- Accepting a false null hypothesis denoted by ß

For increasing the efficiency of testing of hypothesis these two types of errors are need
to be minimized.
But these two types of errors are not mutually exclusive. If we try to minimize Type I
error Type II error will increase and vice versa.

Prof. Dipankar Dutta

Dept. of Commerce
Balurghat College
 Testing of Hypothesis

We want to minimize Type II error by keeping the Type I error at a constant level say
1% or 5% or 10%. This particular value ∞ is known as the level of significance by
which the size of the critical or rejection region is specified.
H0 will be rejected if the computed value of the test statistic falls under the critical
region, otherwise, H0 will be accepted.
Problem:- suppose to test 5% level of Significance whether the population mean µ is
greater than 50, a sample size of 25 is taken and it is observed that the sample mean x is
54. Test the hypothesis if population variance σ2 is given as 100.
Step I : alternative hypothesis then Null Hypothesis
H0: µ = 50
H1: µ>50 Right-tailed test
Step II Determine Test Statistic and its Sampling Distribution
𝒙̅− µ
which follows Z distribution
𝝈/√𝒏
Step III: - Level of significance 5%
Step IV: Calculate the value of test statistic

𝒙̅− µ 𝟓𝟒−𝟓𝟎
= =2
𝝈/√𝒏 𝟏𝟎/√𝟐𝟓
Step V: Computed value in step IV is compared with the table value Z0.05 = 1.645
If the calculated value of test statistic is grater that or equal to 1.645 H0 will be rejected.
Otherwise, it is accepted.
ZCV > Z0.05 H0 is rejected
In the case of right tailed (left tailed) test if the calculated value is greater (less) than or
equal to the tabulated value H0 will be rejected.
In the case of both tailed test H0 will be accepted if the calculated value lies within two
tabulated value (∞/2) H0 will be rejected.

Prof. Dipankar Dutta

Dept. of Commerce
Balurghat College