If p-value = 0.03 and α = 0.05, should you reject H0?

Prepare for the PHFO Quantitative Analysis For Business Exam. Study with flashcards, multiple choice questions, hints, and explanations to ensure confidence and success in your exam!

Multiple Choice

If p-value = 0.03 and α = 0.05, should you reject H0?

Explanation:
In hypothesis testing, you compare the p-value to your chosen significance level to decide whether to reject H0. The p-value is the probability, under the null hypothesis, of obtaining results as extreme as the observed data. The significance level α sets how willing you are to make a Type I error (rejecting a true H0). Since the p-value is 0.03 and α is 0.05, 0.03 ≤ 0.05, so the result is statistically significant at the 5% level. You reject H0 and conclude there is evidence against it in favor of the alternative. The other options don’t fit: not enough information isn’t needed because both p-value and α are given, and saying the p-value is greater than α is false because 0.03 is not greater than 0.05.

In hypothesis testing, you compare the p-value to your chosen significance level to decide whether to reject H0. The p-value is the probability, under the null hypothesis, of obtaining results as extreme as the observed data. The significance level α sets how willing you are to make a Type I error (rejecting a true H0).

Since the p-value is 0.03 and α is 0.05, 0.03 ≤ 0.05, so the result is statistically significant at the 5% level. You reject H0 and conclude there is evidence against it in favor of the alternative.

The other options don’t fit: not enough information isn’t needed because both p-value and α are given, and saying the p-value is greater than α is false because 0.03 is not greater than 0.05.

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