Z-Test
Here are the four basic steps to completing a hypothesis z-test.
1. State the Hypotheses
-State the Null Hypothesis
-State the Alternative Hypothesis
2. Set the Decision Criteria
-Specify the significance level (otherwise known as the alpha level, and
traditionally .05)
-Determine the critical value of z
Do this for the chosen significance level.
For alpha=.05 we look up a Z that has .025 of the distribution beyond
it. This is a Z of +1.96 and -1.96.
3. Gather Data
-Not too much explanation needed.
4. Evaluate the Hypothesis
-Determine the standard error of the mean by the following formula:
-Calculate the Test Statistic: To
determine how unusual the mean of a sample is, use the following Z formula to
calculate the Z value for our sample mean under the assumption that the null
hypothesis is true. The Z formula is:
-Decision Making Time: look the
obtained Z value up in a Z table to find the corresponding P, and compare it to
the Critical Z value. If the obtained P is less than alpha, we reject the null
hypothesis.