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Statistics for Economics, Second Edition by Shahdad Naghshpour

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CHAPTER 7

Statistical Inference with Test of Hypothesis

Hypothesis

A hypothesis is a claim about a population parameter. Hypothesis testing allows researchers to draw inferences about population parameters using sample statistics. The process of statistical inference involves a decision about the plausibility of a hypothesis.

Definition 7.1 The null hypothesis reflects the status quo, how things have been, or are currently. A null hypothesis can represent a historical fact or deliberate setting of a mechanical device. The null hypothesis is depicted by the symbol H0, pronounced h-sub-zero.

Definition 7.2 The alternative hypothesis is the researcher’s claim that there exists some difference or change from the null hypothesis. Although hypothesis ...

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