Explore Hypothesis Testing in Business Statistics

Explore Hypothesis Testing in Business Statistics

Self employed or business owners want to know whether their decisions will affect their business or not. For this, before taking any decision, they should have to explore the advantages of hypothesis testing. By doing this, the owner of the business have more confidence in his/her decision. In hypothesis testing, the critical value plays a vital role which indicates the rejection region of your decision. Simply you can use online critical value calculator that helps you to determine the critical value with its left and the right tail.

What is Hypothesis Testing in Business?

It is the understanding of the effect of one factor on another factor by exploring the relationship’s statistical significance. In business, to explain how much increase in the working hours will increase the productivity of products. Usually, the business managers use the outcomes of hypothesis test in making business decisions. In hypothesis testing, critical values are used and people work with the small percentage of population or data. Give an account to critical value calculator that helps you to find the critical region of your sample space. So, hypothesis testing will be taken in account to know how accurate your result is.


It’s a six step procedure for the hypothesis testing:

  • Null Hypothesis
  • Alternative Hypothesis
  • Significance Level
  • Test Statistics
  • Critical Value
  • Decision Rule

Null hypothesis

The null hypothesis is the opposite of the “guess” from the research made. For example: The people think the plant height will be different for the fertilizers. The null would be that there will be no difference between the groups of plants. The null hypothesis is defined as:

H0 = µ123=………=µk

For k levels of experimental treatment.

Alternative Hypothesis

When the null hypothesis is rejected, then the alternative hypothesis is helpful. There are many possibilities for the rejection of null hypothesis as µ1≠µ23=………=µk or µ12≠µ3=………=µk or µ1≠µ2≠µ3≠………≠µk.

Significance Level

The significance level is chosen to control the probability of the TYPE 1 error. This type of error occurs when the null hypothesis is false rejected. The significance level is an important point in the hypothesis testing, if you know the level of confidence and then simply enter in the online critical value calculator which readily calculates the critical value for the different distributions.

Test Statistics

It is used to test the significance level or set of confidence interval. It checks the null hypothesis should be rejected and it is calculate under the assumption the null hypothesis is correct.

Critical Value

The rejection region can be found by using the critical value of the graph. The rejection region is the area that is extreme to the critical value. When it comes to calculate the critical value from different distributions, account to the accurate online critical value calculator that helps you to determine the critical value from f, t, and z value as well as from chi-square distribution.

Decision Rule

In this step, it is to decide that either reject the null hypothesis or decide to fail to reject the null hypothesis. Here, an extreme test statistic is one that lies outside the area of critical value or values. As hypothesis testing is an important factor in business for decision making for the future. Critical value plays a significant role by telling the acceptance and rejection region. For ease, simply try online critical value calculator that helps you to find the critical value by different distribution techniques.