An aspiring venture capitalist is interested in studying early-stage companies. She claims that the proportion of new businesses that earn a profit within the first two years of operation is more than 18%. If the venture capitalist chooses a 10% significance level, what is/are the critical value (s) for the hypothesis test

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Mathematics

Sly

30 March, 20:38

An aspiring venture capitalist is interested in studying early-stage companies. She claims that the proportion of new businesses that earn a profit within the first two years of operation is more than 18%. If the venture capitalist chooses a 10% significance level, what is/are the critical value (s) for the hypothesis test

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Lawson Blair · Answer 1

The critical value is 6.314

Step-by-step explanation:

Null hypothesis: The proportion of businesses that earn a profit within the first two years of operation is 80%

Alternate hypothesis: The proportion of businesses e earn a profit within the first two years of operation is greater than 18%

The hypothesis test has one critical value because it is a one-tailed test. It is a one-tailed test because the alternate hypothesis is expressed using the inequality, greater than.

n = 2

degree of freedom = n - 1 = 2 - 1 = 1

significance level = 10%

Using the t-distribution table, critical value corresponding to 1 degree of freedom and 10% significance level is 6.314.