Quantitative Business Analysis

Hypothesis Testing

Hypothesis testing is a well-structured process that consists of several logical steps, and it aims at refining a business decision.

Hypothesis testing is a quite common technique used by researchers. With regard to hypothesis testing, answer the following questions.

• What are the steps to conduct a hypothesis test? How does a researcher determine which statistical test to conduct?
• How does a researcher determine which level of significance to use?
• What software programs can be used to compute these tests? Where is the critical test value found?
• How can one determine if the null hypothesis should be rejected?
• Give a business example on each of the three possible cases of hypothesis testing. Do you think the rejection region will be different in each one of the three cases? Why? Why not?

Justify your answers using examples and reasoning.