Economics Question:

What are the steps in hypothesis testing?

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Answer:

An experiment is described by an exponential random variable with mean ? and x1 and x2. A proposed test of the hypothesis ?=2 against the alternative ?=½ uses the critical region {(x1, x2): min(x1, x2) <¼} Show that this test has size of approximately 0.22 and find its power. Obtain a better test of the same size

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