hw7ins - MSPE PROGRAM ECON 506 FALL 2011 Instructions for...

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Unformatted text preview: MSPE PROGRAM ECON 506 FALL 2011 Instructions for Excel Problem in HW7 NOTE : This is a quick review of the basic things that you are supposed to do. Note that NORMSINV and NORMDIST are two functions in Excel. Power function: Assume that is the population unknown parameter. Then power function power ( ) is defined as: power ( ) = Prob. (rejecting null | the true value of is ) In other words power function gives the probability of rejecting null for different possible values of parameter. Thus to find the power function we should: 1- First find the rejection region and then 2- Find the probability that sample points fall in the rejection region for different possible values of the parameter under consideration. How to find the Rejection Region? For finding the rejection region we use the given significance level, . Note that in 3 of 4 tests in the HW, the test is one sided and the rejection region lies in the lower tail of the distribution. The one remaining test (test #3) is two sided and rejection region tail of the distribution....
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This note was uploaded on 01/27/2012 for the course ECON 506 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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hw7ins - MSPE PROGRAM ECON 506 FALL 2011 Instructions for...

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