Question

In: Economics

assuming that your t-statistic is 1.17. show how you compute the p-value step by step.

assuming that your t-statistic is 1.17.
show how you compute the p-value step by step.

Solutions

Expert Solution

To find the p-value for your test statistic:

  1. Look up your test statistic on the appropriate distribution. (example: for a standard normal distribution, follow the z-table)

  2. Find the probability that Z is beyond (more extreme than) your test statistic:

  • If Ha contains a less-than alternative, find the probability that Z is less than your test statistic (that is, look up your test statistic on the Z-table and find its corresponding probability). This is the p-value.

  • If Ha contains a greater-than alternative, find the probability that Z is greater than your test statistic (from the Z-table, find its corresponding probability, and subtract it from one). The result is your p-value.

  • If Ha contains a not-equal-to alternative, find the probability that Z is beyond your test statistic and double it. There are two cases:

    If your test statistic is negative, first find the probability that Z is less than your test statistic (look up your test statistic on the Z-table and find its corresponding probability). Then double this probability to get the p-value.

    If your test statistic is positive, first find the probability that Z is greater than your test statistic (from the Z-table, find its corresponding probability, and subtract it from one). Then double this result to get the p-value.

  


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