8.3 step 3 hypothesis testing

6 steps in Hypothesis Testing

Critical value approach

State null (H0)and alternative (H1) hypotheses

Choose level of significance, α, and sample size, n

Determine appropriate test statistic and sampling distribution (Z or T)

Determine critical values and identify rejection and non-rejection regions

Collect data, compute test statistic value, and see which region it falls in

Make statistical decision and state managerial conclusion in the context of the business problem