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Hypothesis Testing Steps

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List the steps involved in hypothesis testing using: a) the traditional/classical method; b) the probability-value method. Provide an example of each.

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Solution Summary

This solution details the fives steps in the classic and p-value approach. It also gives fully worked examples and explanations for each approach.

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The five steps in the classical approach are:

1. Hypotheses
2. Level of Significance
3. Decision Rule: Reject the null hypothesis if |tsample| > tCritical value)
4. Calculation of the test-statistic
5. Decision.

The five steps in the p-value approach are:

1. Hypotheses
2. Level of Significance
3. Decision Rule: Reject the null hypothesis if p-value < 
4. Calculation of the test-statistic and p-value
5. Decision.

Suppose that we have the following problem: The marketing department of a major household products manufacturer is considering whether or not to send some of its sales executives on a one week top-up salesmanship ...

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