Statistics for Decision- Making in Business - Maricopa Community ...
Statistics for Decision- Making in Business - Maricopa Community ...
Statistics for Decision- Making in Business - Maricopa Community ...
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Structure of a Hypothesis Test<br />
The follow<strong>in</strong>g should be <strong>in</strong>cluded <strong>in</strong> all hypothesis tests:<br />
1. A statement of compet<strong>in</strong>g hypotheses ( vs. )<br />
2. A decision rule <strong>for</strong> reject<strong>in</strong>g (based on )<br />
3. A decision criterion rule (the physical value of the random variable that represents the<br />
required “extremeness” of our observed sample value.<br />
4. A conclusion statement (what the sample data tells you to conclude)<br />
As an important note: we never say, “accept as true.” Instead, we rema<strong>in</strong> accurate and say<br />
that there is simply not enough evidence to reject it. Th<strong>in</strong>k about this as “<strong>in</strong>nocent,” vs. “not<br />
guilty.” Just because a court cannot prove that someone is guilty, they don‟t say that he is<br />
<strong>in</strong>nocent. Instead, they give the verdict of “not guilty.”<br />
Homework Problems – 7.1<br />
1. In your own words, expla<strong>in</strong> the difference between the null and alternative hypotheses.<br />
Also, expla<strong>in</strong> how to identify each <strong>in</strong> a research study.<br />
2. Expla<strong>in</strong> why we assume that the null hypothesis is true be<strong>for</strong>e test<strong>in</strong>g a hypothesis.<br />
3. It is believed that 7% ( ) of an organic corn crop is lost to <strong>in</strong>sect <strong>in</strong>festations. An<br />
organic farmer has devised a system that may result <strong>in</strong> less <strong>in</strong>sect destruction. He would<br />
like to test this idea with a hypothesis test. Write the compet<strong>in</strong>g hypotheses.<br />
4. A high school statistics class typically gets an average of scores out of 5 on an<br />
Advanced Placement (AP) exam. Over the recent several years, he has found that his<br />
students‟ scores were higher. He would like to test this hypothesis. Write the compet<strong>in</strong>g<br />
hypotheses.<br />
5. A snack dispenser has a failure rate of over a 5-year span. After changes to the<br />
mach<strong>in</strong>e, the manufacturer would like to know whether or not this has changed. Write<br />
compet<strong>in</strong>g hypotheses.<br />
6. What does it mean to say that when describ<strong>in</strong>g a Type I error<br />
7. Based on the “Structure of a Hypothesis Test” blue box, fully describe the hypothesis test<br />
<strong>for</strong> the scenario <strong>in</strong> question 3, assum<strong>in</strong>g and that he f<strong>in</strong>ds that only 52 out of<br />
1000 bushels of his crop are lost to <strong>in</strong>sect <strong>in</strong>festations.<br />
8. Based on the “Structure of a Hypothesis Test” blue box, fully describe the hypothesis test<br />
<strong>for</strong> the scenario <strong>in</strong> question 4, assum<strong>in</strong>g and that he f<strong>in</strong>ds his students have<br />
been averag<strong>in</strong>g ̅ on the test.<br />
<strong>Statistics</strong> <strong>for</strong> <strong>Decision</strong>-<strong>Mak<strong>in</strong>g</strong> <strong>in</strong> Bus<strong>in</strong>ess © Milos Podmanik Page 218