METHODS OF DATA ANALYSIS
DECISION MAKING WITH HYPOTHESIS TESTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The maximum probability of a Type I error that the decision maker will tolerate is called
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the level of significance
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critical value
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decision value
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probability value
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Explanation:
Detailed explanation-1: -The probability of committing a type I error (rejecting the null hypothesis when it is actually true) is called (alpha) the other name for this is the level of statistical significance.
Detailed explanation-2: -Type 1 errors have a probability of “” correlated to the level of confidence that you set. A test with a 95% confidence level means that there is a 5% chance of getting a type 1 error.
Detailed explanation-3: -The probability of committing a type I error is equal to the level of significance that was set for the hypothesis test. Therefore, if the level of significance is 0.05, there is a 5% chance a type I error may occur.
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