Solution

ID: past-exam-of-the-options-ii-course-of-the-university-of-oxford/2010/o/o4/b/iv/solution

For a two-sided 5% test, the critical values are . Since , do not reject the null at the 5% level.
For the prespecified directional alternative , the numerator tends to be negative. Use the lower-tail critical region at the 5% level. Since , reject in favor of in the one-sided test. The direction should be chosen from the additional scientific information rather than selected after inspecting the sign of this same statistic.

New to topics? Read the docs here!