STAT 20 Lecture Notes - Lecture 26: Null Hypothesis, Test Statistic
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Setting up a test: define null and alternative hypothesis, compare test statistic, find p-value, make a decision based on a 5% level of significance. Ex: a senator introduces a bill, he claims in this bill that total tax revenues makes a srs of 100 tax returns out of a population of 100000. They compute the difference of teach tax return in the sample under the new rule and the old rule. The sample average of the differences is - with sd = . Q: is the senator correct that the average difference is the population is zeros: null hypothesis is saying that the observed value is due to chance. Null: average difference of new and old returns = 0. Box: 100000 tickets, each ticket is new minus old. Avg. box = 0 sd box = 725 (bootstrap sample) The alternative hypothesis is the idea that the observed difference is real.
