Here are the essential concepts you must grasp in order to answer the question correctly.
Population Variance
Population variance (σ²) measures the dispersion of a set of values in a population. It is calculated as the average of the squared differences from the mean. In hypothesis testing, we often compare the sample variance (s²) to the claimed population variance to determine if there is enough evidence to reject the null hypothesis.
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Hypothesis Testing
Hypothesis testing is a statistical method used to make decisions about a population based on sample data. It involves formulating a null hypothesis (H0) and an alternative hypothesis (H1), then using sample statistics to determine whether to reject H0 at a specified significance level (α). In this case, we are testing if the population variance is equal to a specific value.
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Significance Level (α)
The significance level (α) is the probability of rejecting the null hypothesis when it is actually true, also known as a Type I error. It represents the threshold for determining whether the observed data is statistically significant. In this scenario, α is set at 0.01, indicating a 1% risk of concluding that a difference exists when there is none.
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