Hypothesis testing is the subject of this chapter.
Customarily, the alternative hypothesis is
The critical value(s) of the test statistic you would use is (are): (a) -1.96, 1.96 (d) -1.645 (b) 1.96 (e) -2.060, 2.060 (c) 1.645 (f) 1.7082140-1
For example, the alternative hypothesis is
This proce- dure can be viewed as a test of the hypothesis p = .05 against the alternative p > .05, p being the probability that the machine turns out a defective item.
State any assumptions you made in testing the given hypothesis.
At first glance it makes sense, but the consequence of making a false alarm could be costly. For example, silicone breast implants have been commonly available since 1963, and Dow Corning was the major chemical company that manufactures silicone gel. But after some women who received the implant complained that they were very ill and the possible cause was the silicone gel, the US Food and Drug Administration (FDA) conducted a review and decided there wasn't enough data to show silicone breast implants were safe. As a precautionary measure, the FDA banned all silicone breast implants from 1992-2006. It is important to point out that the FDA did not have evidence to indicate that silicone breast implants are unsafe; rather, it demanded the evidence to ensure its safety. But the FDA's ban had triggered a massive flood of lawsuits against Dow Corning. In 1993 Dow Corning lost more than $287 million. Consequently, Dow Corning was under Chapter 11 protection from 1993-2004. Nonetheless, later many independent scientific studies, including the one conducted by U.S. Institute of Medicine (IOM), found that silicone breast implants do not seem to cause breast cancers or any fatal diseases. But the company's reputation had severely damaged, almost beyond redemption (Gardner, 2008).