3-6-09 - Economic Statistics Class Notes 3/6/09 HYPOTHESIS...

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Economic Statistics – Class Notes – 3/6/09 HYPOTHESIS TESTING Case #3: A Test on an Assumed Value of the Variance Suitable Test Statistic: 1. Known Distribution – necessary, not sufficient because it also has to apply to the problem
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Null hypothesis – also known as the MAINTAINED HYPOTHESIS - the assumed value that we believe to be true until shown otherwise. Step #4: Estimate Chi-square (USUALLY DONE IN STEP #2 FOR NUMERICAL EXAMPLES) Step #5 : Decide and Interpret CASE #4 : An F-Test on the EQUALITY of Two Population VARIANCES . The NULL HYPOTHESIS will always be of the form shown below. The alternative hypothesis will always be of the form shown below KEY : The variance that is greater should be called #1 and the variance that is less should be called #2. NOTE: is ALWAYS the larger assumed value , so, ALWAYS make the larger assumed value and ALWAYS write H1 as: .
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F-TESTS ARE ALWAYS FOUND IN THE RIGHT TAI L, BECAUSE THAT IS WHAT TAIL THE TABLE GIVES VALUES FOR. 2. A suitable test statistic is:
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3-6-09 - Economic Statistics Class Notes 3/6/09 HYPOTHESIS...

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