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HYPOTHESIS TESTING
= Level of Significance SS = Sample Statistic
TS = Test Statistics CV = Critical Value
TV = Table Value SE = Standard Error
Statistical Significance vs
Economical Significance
Statistically significant results
may not necessarily be
economically significant.
A very large sample size may
result in highly statistically
significant results that may be
quite small in absolute terms.
2 known x 0
z= Ho: 0 vs Ha: >0
N. dist. n
N. dist.
n
( x1 x2 ) ( 1 2 )
t( +
=
n n 2
1 2
)
1 1
sP +
n1 n2 Ho:1 - 2 0 vs Ha: 1 -2 > 0
Unknown variances
where;
Equality of the assumed equal. Reject H0 if TS > TV
( n1 1) s1 + ( n2 1) s 2
2 2
Means of Two sP =
n1 + n2 2
Normally Ho:1 - 2 > 0 vs Ha: 1 -2 < 0
df = n1+n2 - 2
Distributed Reject H0 if TS < -TV
Populations based
on Independent Ho:1 - 2 = 0 vs Ha: 1 - 2 0
( x1 x 2 ) ( 1 2 )
Unequal unknown t=
Samples. Reject H0 if | TS | > TV
s12 s 22
variances. +
n1 n2
= ;
>
the population.
= .
1
Decision Rule Non-Parametric Test
Decision Rule Dont consider a particular
Reject H0 if TS > TS
Reject H0 if TS > TV population parameter.
S
n
S = Chi-Square Or
Distribution F- Distribution Have few assumptions
( )
Right skewed. regarding population.
=
Asymmetrical.
1
Bounded from below Bounded by zero.
by zero.
Chi-Square values
can never be ve.
Decision Rule
H0: d d0 vs Ha: d > d0
Reject H0 if TS > TV.
H0: d d0 vs Ha:d < d0
Reject H0 if TS <-TV
H0: d = d0 vs Ha: d d0
Reject H0 if TS > TV.