Section 4 Definitions

Hypothesis

A statement about a population parameter subject to verification

Hypothesis Testing

A procedure based on sample evidence and probability theory to determine whether the hypothesis is a reasonable statement.

Six-Step Procedure for Testing a Hypothesis

Step 1

State null and alternate hypotheses

Six-Step Procedure for Testing a Hypothesis

Step 2

Select a level of significance

Six-Step Procedure for Testing a Hypothesis

Step 3

Identify the test statistic

Six-Step Procedure for Testing a Hypothesis

Step 4

Formulate a decision rule

Six-Step Procedure for Testing a Hypothesis

Step 5

Take a sample, arrive at decision

Six-Step Procedure for Testing a Hypothesis

Step 6

Interpret the result

Null Hypothesis

A statement about the value of a population parameter developed for the purpose of testing numerical evidence

Alternate Hypothesis

A statement that is accepted if the sample data provide sufficient evidence that the null hypothesis is false.

Level of Significance

The probability of rejecting the null hypothesis when it is true.

Type I Error

Rejecting the null hypothesis, H₀, when it is true.

Type II Error

Not rejecting the null hypothesis when it is false

Test Statistic

A value, determined from sample information, used to determine whether to reject the null hypothesis.

Critical Value

The dividing point between the region where the null hypothesis is rejected and the region where it is not rejected.

p-Value

The probability of observing a sample value as extreme as, or more extreme than, the value observed, given that the null hypothesis is true.