Critical value

A critical point helps to determine whether to accept/reject the null hypothesis. It is a point on test distribution that is compared to the test statistic, and if the absolute value of the test statistic is greater than the critical value, the null hypothesis is rejected or otherwise accepted. Steps to test a null hypothesis through critical value are:

 

1. Decide a null hypothesis.

2. Considering the null hypothesis to be true, calculate the value of test statistic.

3. Calculate the critical value by finding the value of the known distribution of the test statistic such that the probability of making a Type I error is small.

4. Compare the test statistic to the critical value and decide to accept or reject the null hypothesis.