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A pharmaceutical manufacturer wants to decide whether a proportion of 90% of all

ID: 3388099 • Letter: A

Question

  A pharmaceutical manufacturer wants to decide whether a proportion of 90% of all the patients given a medication will stand the chance of recovering. His hypothesis is H0 : = 0.85 versus H1 : = 0.55. Based on a sample of  n = 10 trials (i.e. number of patients treated) his test statistic is X, the number of successful recoveries. His decision rule (test) is that he will accept H0 if  X 9, otherwise he will conclude that H1 : = 0.55 is true. Without actually computing the final values find by just formulating the formulas:

a) the significance level

b)         the power of the test.

Explanation / Answer

A pharmaceutical manufacturer wants to decide whether a proportion of 90% of all

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