BA 3 - Hypothesis Testing

Question 1

Null Hypothesis

Answer 1

H0:
Statement about a topic of interest about the population typically based on historical information or conventional wisdom.

Question 2

Alternative Hypothesis

Answer 2

HA:

Theory or claim about a topic of interest about the population that we are trying to substantiate.

Question 3

Steps of a hypothesis test

Answer 3

i. State the null and alternative hypotheses;
ii. Choose the level of significance for the test;
iii. Gather data about a sample or samples;
iv. Construct a range of likely sample means, or calculate the p-value; and
v. Reject the null hypothesis or fail to reject the null hypothesis.

Question 4

P-value

Answer 4

likelihood of obtaining a sample as extreme as the one we have obtained, if the null hypothesis is true.

Question 5

Interpreting p-value

Answer 5

Reject null hypothesis:
sample mean falls within the rejection region, or if the p-value is lower than the level of significance.

Fail to reject null hypothesis:
sample mean falls within the range of likely sample means, or if the p-value is greater than the level of significance.

Question 6

P-value for one- and two-sided tests

Answer 6

P-value for a one-sided hypothesis test is half the value of a two-sided hypothesis test.

Question 7

Type I and Type II errors

Answer 7

Type I error:
rejecting H0 when it’s true.

Type II error:
failing to reject Ho when it’s not true.

Question 8

Type I and Type II tradeoffs

Answer 8

Higher confidence level => lower significance level => lower chance of rejecting H0 when it’s true => lower chance of Type I error.

Higher confidence level => higher chance of not rejecting H0 when it’s not true => higher chance of Type II error.

Question 9

[EXCEL] To get p-value

Answer 9

=T.TEST(array1, array2, tails, type)