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Test Statistic
The next step is compute an appropriate test statistic which is based on an appropriate probability distribution. It is used to test whether the null hypothesis set up should be accepted or rejected. For this purpose we use Z distribution under normal curve for large sample where the sample size is equal to or larger than 30 (n ≥ 30) and the distribution for small sample where the sample size n less than 30 ( n< 30).
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Level of Significance In testing a given hypothesis the maximum probability with which we would be willing to take risk is called level of significance of the test.
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