sbe10_06a-51 - Statistics for Business and Economics Chapter 6 Inferences Based on a Single Sample Tests of Hypothesis Learning Objectives 1 Distinguish

sbe10_06a-51 - Statistics for Business and Economics...

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Statistics for Business and Economics Chapter 6 Inferences Based on a Single Sample: Tests of Hypothesis
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Learning Objectives 1. Distinguish Types of Hypotheses 2.Describe Hypothesis Testing Process 3.Explain p-Value Concept 4. Solve Hypothesis Testing Problems Based on a Single Sample 5.Explain Power of a Test
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Inferential Statistics
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5. Two possible errors can be made. Type I error: Reject a true null hypothesis Type II error: Do not reject a false null hypothesis. P(Type I error) = α P(Type II error) = β
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Decision Results H 0 : Innocent Jury Trial Actual Situation Verdict Innocent Guilty Innocent Correct Error Guilty Error Correct H 0 Test Actual Situation Decision H 0 True H 0 False Accept H 0 1 – Type II Error ( ) Reject H 0 Type I Error ( ) Power (1 – )
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& Have an Inverse Relationship You can’t reduce both errors simultaneously!
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Nonstatistical Hypothesis Testing In our judicial system Type I errors are regarded as more serious. We try to avoid convicting innocent people. We are more willing to acquit guilty people.
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