# 5-Step Hypothesis Test

Perform 5-Step Hypothesis Test on Data.

Describe the results of the Hypothesis Test, and explain how the findings from this Hypothesis Testing can be used to answer the following research question:

Do countries with higher life expectancy rates (70 and over) have literacy rates of 95% or greater?

[We can use an error rate of +/- 0.05%]

[Please refer to the attachment for details]

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#### Solution Preview

State the null and alternate hypothesis

Null Hypothesis: The countries with higher life expectancy rates (70 and over), have literacy rates greater than or equal to 95%.

H_0: Î¼â‰¥95

Alternate Hypothesis: The countries with higher life expectancy rates (70 and over), have literacy rates less than 95%.

H_1: Î¼<95

Select the Level of Significance - the Alpha Value

In hypothesis testing, the significance level is the criterion used for rejecting the null hypothesis. Level of significance can be chosen arbitrarily from the commonly used ones like 5% (Î±=0.05), 1% (Î±=0.01) and 0.1% (Î±=0.001). The lower the significance level, the more the data must diverge from the null hypothesis to be significant. Therefore, Î±= 0.01 level is more conservative than an Î±= 0.05 level. A smaller level of Î± increases confidence in the determination of significance, but leads to an ...

#### Solution Summary

The solution provides step-by-step method of performing a 5-step hypothesis test. All the steps of hypothesis testing (formulation of null and alternate hypotheses, selection of significance level, choosing the appropriate test-statistic, decision rule, calculation of test-statistic and conclusion) have been explained and the statistical analysis has been shown in details. The calculations have also been shown in EXCEL for better understanding.