Suppose that a pharmaceutical company wants to claim that side effects will be experienced by fewer than 20% of the patients who use a particular medication. In a clinical trial with n = 400 patients, they find that 68 patients experienced side effects. We wish to conduct a hypothesis test to determine if the company’s claim is true.
1. Determine the null and alternative hypotheses.
H0: π > 0.2 (the Company’s claim is not true)
H1: π < 0.2 (the Company’s claim is true)