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Economics for Management Studies
Victor Yu

Chapter 9—Hypothesis Testing 9.1 Null & Alt Hypothesis Testing Rules: with =/≠ hypothesis must be critical values (c) ±H or 0ymmetric -the farther away c &1c ar2, the harder to conclude H or H a 0 -Cannot have a=0 -if you want to control a to be smaller, then ß will become larger, and vice versa 9.2 Type I and Type II Error Step 1: Set up Null & Alt Hypothesis Step 2: Decision/Rejectuin rule eg.(x>c, reject h, x≤c accept h) -can write in terms of alpha, x or z (3 ways) -when you change the decision rule, the conclusion changes Step 3: look @ Sample Results (eg. X) -do not have control over x!! Step 4: Make a decision “P Value” = % from Z Chart -a is given a P value % and is associated with “reject H ” decision on the graph 0 -When doing a u≠ test, a must be divided by 2 as it is a 2 sided test ASSUME STD DEV is KNOWN & n large (≥30) or normal CONFIDENCE INTERVAL: to get critical values for When std dev is unknown, “z value” test statistic: a ≠ test a/2 % : a/2 : Z 90% : 0.05 : 1.645 95% : 0.025 : 1.960 Use T Chart & Degree of freedom chart 99% : 0.005 : 2.576 Df on left bar, P value % on top bar, t value on body, Cannot find exact value, but will find a range Test Statistic x or z, or “turn into standard Normal” Finding Conclusion: One sided: if a is > or < (as per H) your range Two Sided: Multiply your
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