A significance test of H: B = 0 against the two-sided alternative H: B # 0, where B = the slope of the population least-squares regression line for predicting Ethereum price from Bitcoin price, was conducted at the 5% significance level. Which of the following gives the correct decision for the significance test and the possible error that could result from this decision? (A) Fail to reject the null hypothesis; Type I error (B) Fail to reject the null hypothesis; Type II error (C) Reject the null hypothesis; Type I error (D) Reject the null hypothesis; Type II error (E) Reject the null hypothesis; either Type I error or Type Il error is possible
Question
A significance test of H: B = 0 against the two-sided alternative H: B # 0, where B = the slope of the population least-squares regression line for predicting Ethereum price from Bitcoin price, was conducted at the 5% significance level. Which of the following gives the correct decision for the significance test and the possible error that could result from this decision? (A) Fail to reject the null hypothesis; Type I error (B) Fail to reject the null hypothesis; Type II error (C) Reject the null hypothesis; Type I error (D) Reject the null hypothesis; Type II error (E) Reject the null hypothesis; either Type I error or Type Il error is possible
Solution
The answer to this question depends on the results of the significance test, which are not provided in the question. However, I can explain what each option means:
(A) If we fail to reject the null hypothesis, it means that we did not find enough evidence to suggest that the slope of the population least-squares regression line for predicting Ethereum price from Bitcoin price is different from 0. The possible error here could be a Type I error, which means we incorrectly rejected a true null hypothesis. However, since we did not reject the null hypothesis in this case, a Type I error is not possible.
(B) If we fail to reject the null hypothesis, the possible error could be a Type II error. This means that we failed to reject a false null hypothesis. In other words, the true slope is not 0, but we did not have enough evidence to prove it.
(C) If we reject the null hypothesis, it means that we found enough evidence to suggest that the slope of the population least-squares regression line for predicting Ethereum price from Bitcoin price is different from 0. The possible error here could be a Type I error, which means we incorrectly rejected a true null hypothesis.
(D) If we reject the null hypothesis, the possible error could be a Type II error. However, a Type II error is not possible in this case because a Type II error occurs when we fail to reject a false null hypothesis.
(E) If we reject the null hypothesis, either a Type I error or a Type II error is possible. However, this is incorrect because a Type II error is not possible when we reject the null hypothesis.
So, without the results of the significance test, it's impossible to definitively answer this question. However, the explanations above should help you understand what each option means.
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A significance test of H: B = 0 against the two-sided alternative H: B # 0, where B = the slope of the population least-squares regression line for predicting Ethereum price from Bitcoin price, was conducted at the 5% significance level. Which of the following gives the correct decision for the significance test and the possible error that could result from this decision? (A) Fail to reject the null hypothesis; Type I error (B) Fail to reject the null hypothesis; Type II error (C) Reject the null hypothesis; Type I error (D) Reject the null hypothesis; Type II error (E) Reject the null hypothesis; either Type I error or Type Il error is possible
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A two-sided alternative hypothesis is also known as a _________________.*1 pointDirectional testNon-directional testParametric testOne-tailed test
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