The procedure for testing the hypothesis about the difference between two proportions involves the following steps:
1. *Formulate the null and alternative hypotheses*:
- H0: p1 - p2 = 0 (no significant difference between the two proportions)
- H1: p1 - p2 ≠ 0 (significant difference between the two proportions)
2. *Choose a significance level*: Select a significance level, usually 0.05 or 0.01.
3. *Calculate the sample proportions*:
- p1 = x1 / n1 (proportion of successes in sample 1)
- p2 = x2 / n2 (proportion of successes in sample 2)
4. *Calculate the standard error*:
- SE = √(p1(1-p1)/n1 + p2(1-p2)/n2)
5. *Calculate the test statistic*:
- z = (p1 - p2) / SE
6. *Determine the critical region*:
- Compare the calculated z-value to the critical z-value from the standard normal distribution.
7. *Make a decision*:
- If the calculated z-value falls in the critical region, reject the null hypothesis (H0) and conclude that there is a significant difference between the two proportions.
- If the calculated z-value does not fall in the critical region, fail to reject the null hypothesis (H0) and conclude that there is no significant difference between the two proportions.
8. *Calculate the p-value*:
- The p-value is the probability of observing a z-value as extreme or more extreme than the one calculated.
- If the p-value is less than the chosen significance level, reject the null hypothesis (H0).
Note: This is a two-tailed test, if you want to test for a specific direction of the difference (e.g. p1 > p2), use a one-tailed test.
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