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14. Statistical Techniques in Business & Economics (10)

10 ­ 1.Copyright © 2003 McGraw­Hill Ryerson Limited. All rights reserved. 10 ­ 2. When you have completed this chapter, you will be able to: Define null and alternative hypothesis . and hypothesis testing Define Type I and Type II errors Describe the five­step hypothesis testing procedure Distinguish between a one­tailed and . a two­tailed test of . hypothesis.Copyright © 2003 McGraw­Hill Ryerson Limited. All rights reserved. 10 ­ 3. Conduct a test of hypothesis about a . population mean. Conduct a test of hypothesis about a . population proportion Explain the relationship between hypothesis . testing and confidence interval estimation. Compute the probability of a Type II error, . and power of a test.Copyright © 2003 McGraw­Hill Ryerson Limited. All rights reserved. Terminology. 10 ­ 4 Hypothesis. is a statement about a population distribution such that:. (i) it is either true or false, but never both, and.(ii) with full knowledge of the population data, . it is possible to identify, with certainty, . whether it is true or false. Examples. the mean monthly income for all . the mean monthly income for all . Examples. systems analysts is $3569 systems analysts is $3569 35% of all customers buying coffee . 35% of all customers buying coffee . at Tim Horton’s return within a week at Tim Horton’s return within a weekCopyright © 2003 McGraw­Hill Ryerson Limited. All rights reserved. Terminology. 10 ­ 5 Alternative Hypothesis H1. is the statement that . we are interested in proving . . . It is usually a research hypothesis. . Null Hypothesis H. o. is the complement of the alternative hypothesis. . We accept the null hypothesis as the default . hypothesis. It is not rejected unless there is . convincing sample evidence against it.Copyright © 2003 McGraw­Hill Ryerson Limited. All rights reserved. Hypothesis Testing 10 ­ 6. Hypothesis Testing Step 1. Step 1 State the null and alternate hypotheses. State the null and alternate hypotheses Step 2. Step 2 Select the level of significance.