Question

It is often said that more than one-fifth of all small businesses fail during the first year. Researchers from the University of Western Australia used data on 5,196 randomly-selected small business start-ups throughout Australia to test the hypothesis that the proportion of all small businesses that fail is in fact higher than 20%.What type of test is this?a. Left- Tailedb. Right- Tailedc. Two-Tailed

Answer 1

Answer:

b. Right-Tailed

Step-by-step explanation:

This hypothesis test have a claim that the proportion of all small businesses that fail is higher than 20%. The alternative hypothesis is then written as:

$H_a:\pi>0.2$

If the sample outcome gives a test statistic that is higher than the critical value (z>z_c), it will fall in the rejection region and the null hypothesis, that states that the proportion is not different from 20%, will be rejected.

As the rejection region comprises all the values in the right tail, above the critical value, we can conclude this is a right-tailed test.