Test Statistic

A statistic is calculated from the sample. To begin with we assume that the hypothesis about the population parameter is true. We compare the value of the statistic with the hypothetical value of the parameter. If the difference between them is small, the hypothesis is accepted and if the difference between them is large, the hypothesis is rejected. A statistic on which the decision can be based whether to accept or reject a hypothesis is called test statistic. It is important to remember that a test-statistic does not prove the hypothesis to be correct but if furnishes as evidence against the hypothesis. Some of the test statistics to be discussed later are Z, t and Chi – Square.