Here are the essential concepts you must grasp in order to answer the question correctly.
Critical Value
A critical value is a point on the scale of the test statistic beyond which we reject the null hypothesis. In hypothesis testing, it is determined based on the significance level (α) and the type of test (one-tailed or two-tailed). For a right-tailed test, the critical value corresponds to the z-score that marks the threshold for the upper tail of the distribution.
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Rejection Region
The rejection region is the range of values for the test statistic that leads to the rejection of the null hypothesis. In a right-tailed test, this region is located to the right of the critical value. It represents the area under the curve where the probability of observing a test statistic is less than the significance level (α), indicating that the observed result is statistically significant.
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Level of Significance (α)
The level of significance, denoted as α, is the probability of rejecting the null hypothesis when it is actually true (Type I error). It is a threshold set by the researcher before conducting the test, commonly used values are 0.05, 0.01, and in this case, 0.08. The choice of α influences the critical value and the size of the rejection region, impacting the test's sensitivity.
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