I found this question from Ian Hacking's book on probability. I understand that this question probablly uses standard deviation due to the 0.01, but what doesn't make sense is what exactly is a null hypotheses, and how would I determine if the study is significant or not?
Suppose the government is testing a new education policy. There are only two possibilities: either the policy will work and it will help high school students learn to write better 3/4 of the time, or it will have no effect and students’ writing will only improve 1/2 of the time, as usual.
H : 3/4 probability of improvement for each student.
¬H : 1/2 probability of improvement for each student.
The government does a study of 432 students and finds that, under the new policy, 285 of them improved in their writing.
(a) If the null hypothesis is ¬H, are the results of the study significant at the .01 level?
(b) If the null hypothesis is H, are the results of the study significant at the .01 level?
This is an unrealistic situation. Why would one suppose it is only possible for the new government policy to result is 3/4 of the students improving or to result in 1/2 improving? And nothing in between?
In fact, the data suggest that about 66% have improved. So it seems we have a government policy, which (as for so very many government policies before it) has delivered considerably less than promised.
@BrianTung has made a valiant effort (+1) to suggest options. I will just crunch some numbers along lines of the instructions as I understand them.
First, whatever hypothesis you test, you have the estimate $\hat p = 285/432 = 0.6597$ of the true improving proportion $p.$
Suppose we test $H_0: p = 3/4.$ Then the z-statistic is $$Z = \frac{\hat p - .75}{\sqrt{\frac{.75(.25)}{432}}} = -4.34.$$ Against a two-sided alternative, you would reject at the 1% level if $|Z|>2.576$, which is true. Against a left-sided alternative, you would reject at the 1% level if $Z < -2.236,$ which is also true. So you would reject $H_0$ whether the alternative was intended to be left- or two-sided. (It is late here, I should have gone to bed an hour ago, and you had better check all of my numbers.)
Similarly, testing $H_0: p = 1/2,$ the z statistic is $$Z = \frac{\hat p - .50}{\sqrt{\frac{.50(.50)}{432}}}.$$ Again I get an answer that leads to rejection at the 1% level against either a right- or two-sided alternative.
Thus, all reasonable scenarios seem to lead to rejecting both hypothesis. That, in spite of the fact that the question seems to me to lead in the direction of saying one of them must be true.
Note: I could have down-voted your question as nonsense, and voted to 'close' it in the grounds that it is 'unclear what you are asking'. But it seems you have cogently figured out that the problem makes no sense, and you are wondering if you have missed something. Maybe so, but I can't make sense of it either--in case that is any consolation.