Summary on Hypothesis Testing

So what did you learn in this session?

1. Hypothesis — a claim or an assumption that you make about one or more population parameters

2. Types of hypothesis:

   • Null hypothesis (H₀) - Makes an assumption about the status quo
                                          - Always contains the symbols ‘=’, ‘≤’ or ‘≥’

   • Alternate hypothesis (H₁) - Challenges and complements the null hypothesis

                                                                  - Always contains the symbols ‘≠’, ‘<’ or ‘>’

3. Types of tests:
   • Two-tailed test - The critical region lies on both sides of the distribution
                                  - The alternate hypothesis contains the ≠ sign
   • Lower-tailed test - The critical region lies on the left side of the distribution
                                     - The alternate hypothesis contains the < sign
   • Upper-tailed test - The critical region lies on the right side of the distribution

                                                 - The alternate hypothesis contains the > sign

4. Making a decision - Critical value method:

   • Calculate the value of Zc from the given value of α (significance level)

   • Calculate the critical values (UCV and LCV) from the value of Zc

   • Make the decision on the basis of the value of the sample mean $\overline{x}$ with respect to the critical values (UCV AND LCV)