A region in the sample space S which amounts to rejection of H0 is termed as critical region or region of rejection. If ω is the critical region and if t = t(x1, x2,………… xn) is the value of the statistic based on a random sample of size n, then
The probability ‘α’ that a random value of the statistic t belongs to the critical region is known as the level of significance. In other words level of significance is the size of the type I error. The levels of significance usually employed in testing of hypothesis are 5 % and 1%. The level of significance is always fixed in advance before collecting the sample information.
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