Hypothesis Testing – One Tail and Two Tail Tests

Hypothesis Testing – One Tail and Two Tail Tests

1. The Steps in Testing

   • Set the null and alternative hypotheses, and desired level of significance
   • Confirm if you will be conducting a one tail or a two tail test.
   • Calculate a test statistic: for now, this will be either a Z statistic or a t statistic.
   • Calculate the probability of observing the test statistic. There are two alternative approaches
     • The P Value Approach = : Use NORM.S.DIST (or a T.DIST to find the p value
     • The Critical Value Approach= Use NORM.S.INV (or a T.INV
   • Draw a Conclusion:
     • ) Reject H0 if the p-value Otherwise, do not reject H0.

2. The Test Statistics

   • For a population mean, where the population standard deviation is known:
   • For a population mean, where the population standard deviation is not known
   • For a population proportion
     • Testing for a Population Proportion
       • Calculate the test statistic
       • Use NORM.S.DIST to find the probability of test statistic occurring.
       • Compare the p value against the desired level of significance to determine whether to reject, or not reject, the null hypothesis

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