Solution

ID: past-exam-of-the-options-ii-course-of-the-university-of-oxford/2013/o4/c/solution

For , the likelihood ratio in favor of the larger variance is
Because , this is strictly increasing in . The Neyman-Pearson lemma therefore selects an upper-tail rejection region. Under the null, , so size is obtained with
Continuity of the chi-squared distribution makes the boundary have probability zero. This is a fixed-mean normal variance test.

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