Question

QUESTION 8
In which case would we choose to a one-sided alternative hypothesis over a two-sided alternative hypothesis?
   A.   We choose a one sided alternative hypothesis when we specify a low (0.01) alpha.
   B.   Choose a one sided alternative hypothesis when the theory and literature suggests either that the coefficient should be greater than zero or that the coefficient should be less than zero.
   C.   We choose a one sided alternative hypothesis when we have a large sample size.
   D.   It does not matter what type of alternative hypothesis we specify.

Answer 1

Ans - B) Choose a one sided alternative hypothesis when the theory and literature suggests either that the coefficient should be greater than zero or that the coefficient should be less than zero

Explanation:

The alternative hypothesis is one-tailed or one-sided if it states that a parameter is larger than or smaller than the null hypothesis value (so the test may be called right-tailed or left-tailed respectively). IT is two-tailed (or two-sided) if it states that the parameter is different than not equal to the null value