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Suppose you make an assumption about a property of the population (this assumption is the null hypothesis ). Then you gather sample data randomly. If the sample has properties that would be very unlikely to occur if the assumption is true, then you would conclude that your assumption about the population is probably incorrect.(Remember that your assumption is just an assumption - it is not a fact and it may or may not be true. But your sample data are real and the data are showing you a fact that seems tocontradict your assumption.)

For example, Didi and Ali are at a birthday party of a very wealthy friend. They hurry to be first in line to grab a prize from a tall basket that they cannot see inside becausethey will be blindfolded. There are 200 plastic bubbles in the basket and Didi and Ali have been told that there is only one with a $100 bill. Didi is the first person to reachinto the basket and pull out a bubble. Her bubble contains a $100 bill. The probability of this happening is 1 200 = 0.005 . Because this is so unlikely, Ali is hoping that what the two of them were told is wrong and there are more $100 bills in thebasket. A "rare event" has occurred (Didi getting the $100 bill) so Ali doubts the assumption about only one $100 bill being in the basket.

Questions & Answers

profit maximize for monopolistically?
Usman Reply
what kind of demand curve under monopoly?
Mik Reply
what is the difference between inflation and scarcity ?
Abdu Reply
What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits?
Mik
why economics is difficult for 2nd school students.
Siraj Reply
what does mean opportunity cost?
Aster Reply
what is poetive effect of population growth
Solomon Reply
what is inflation
Nasir Reply
what is demand
Eleni
what is economics
IMLAN Reply
economics theory describes individual behavior as the result of a process of optimization under constraints the objective to be reached being determined by
Kalkidan
Economics is a branch of social science that deal with How to wise use of resource ,s
Kassie
need
WARKISA
Economic Needs: In economics, needs are goods or services that are necessary for maintaining a certain standard of living. This includes things like healthcare, education, and transportation.
Kalkidan
What is demand and supply
EMPEROR Reply
deman means?
Alex
what is supply?
Alex
ex play supply?
Alex
Money market is a branch or segment of financial market where short-term debt instruments are traded upon. The instruments in this market includes Treasury bills, Bonds, Commercial Papers, Call money among other.
murana Reply
good
Kayode
what is money market
umar Reply
Examine the distinction between theory of comparative cost Advantage and theory of factor proportion
Fatima Reply
What is inflation
Bright Reply
a general and ongoing rise in the level of prices in an economy
AI-Robot
What are the factors that affect demand for a commodity
Florence Reply
price
Kenu
differentiate between demand and supply giving examples
Lambiv Reply
differentiated between demand and supply using examples
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what is labour ?
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Source:  OpenStax, Collaborative statistics using spreadsheets. OpenStax CNX. Jan 05, 2016 Download for free at http://legacy.cnx.org/content/col11521/1.23
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