Here are the essential concepts you must grasp in order to answer the question correctly.
Critical Value
The critical value is a threshold that determines the boundary for rejecting the null hypothesis in hypothesis testing. For a two-tailed test, it divides the significance level (α) into two equal parts, indicating the points beyond which the null hypothesis can be rejected. In this case, with α = 0.03, the critical values will be found at the 1.5% tails of the standard normal distribution.
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Rejection Region
The rejection region is the area in the tails of the distribution where, if the test statistic falls, the null hypothesis is rejected. For a two-tailed test with α = 0.03, the rejection regions are located in both tails of the distribution, specifically beyond the critical values. This region represents the extreme values that are unlikely to occur if the null hypothesis is true.
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Z-Test
A z-test is a statistical test used to determine whether there is a significant difference between sample and population means when the population variance is known. It utilizes the standard normal distribution to calculate the z-score, which indicates how many standard deviations an element is from the mean. In the context of this question, the z-test is applied to assess hypotheses based on the critical values and rejection regions derived from the significance level.
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