Question

A) What is the significance level in a hypothesis test? When it is determined in the test and why?

B) What does the test statistic represent in a hypothesis test.

Answer 1

a)

The null hypothesis is rejected if the p-value is less than a predetermined level, α. α is called the significance level, and is the probability of rejecting the null hypothesis given that it is true (a type I error). It is usually set at or below 5%.

It is determined before the start of the test as it may generate bias if it is taken after the test.

b)

A test statistic is a random variable that is calculated from sample data and used in a hypothesis test. You can use test statistics to determine whether to reject the null hypothesis. Thetest statistic compares your data with what is expected under the null hypothesis.