Concept explainers
Explain the four steps of hypothesis testing.
Answer to Problem 1FP
The four steps of hypothesis testing are (1) Stating the hypotheses, (2) Set the criteria for decision, (3) Compute the test statistic and (4) making a decision.
Explanation of Solution
Four steps of Hypothesis Testing:
Step 1: State the hypotheses.
Step 2: Set the criteria for a decision.
Step 3: Compute the test statistic.
Step 4: Make a decision.
Justification: The hypothesis testing can be done in four steps. The null and alternative hypothesis can be defined in the first step for testing the given claim, the criteria for making the decision based on level of significance is defined in second step. After defining the criteria, the test statistic can be computed in third step to make the conclusions. Finally decision about either rejecting or retaining the null hypothesis is made in the fourth step.
Hence, the four steps of hypothesis testing are (1) Stating the hypotheses, (2) Set the criteria for decision, (3) Compute the test statistic and (4) making a decision.
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