Question

Q29 Explain the hypothesis testing procedure. [6 Marks]

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Answer 1

Hypothesis testing is the procedure of testing assumption to cheak the sample inference is true for entire population or not. It consists of following steps

1)Firstly explicit the knowledge of the nature of the population distribution and parameter of interest on which hypothesis are set up.

2) second step is to set up the null (H_{​​​​​0}​​​​​) and alternative (H₁) hypothesis. Null hypothesis is the assumption which states that there is no difference between actual value and assumed value of parameter. Alternative hypothesis is against the null hypothesis which is accepted when null hypothesis is rejected.

3) Set up suitable significant level

Once the hypothesis are constructed one has to decide suitable confidence level with which null hypothesis is rejected or accepted. It is denoted by  .i.e if confidence level is 95% then we are 95% confident that we made right decision.

4) Choosing a suitable test statistic

The choice of suitable test statistic t=t(x_{​​​​​1}​​​​​ , x_{​​​​​2} ,....,x_​​n ) called the test statistic which will best reflect the probability of null and alternative hypothesis.

5) Finding the critical region

All possible values of test statistic are to be partitioned into two disjoint sets W (called rejection region or critical region) and W^{​​​​​​}​​​​​​' (called the acceptance region) and framing the following test:

A)Reject null hypothesis if the value of t falls in W.

B) Accept null hypothesis if the value of t falls in W'.

6) After framing the above test, obtain experimental sample observations, compute the appropriate test statistic and take action accordingly.