The critical value is determined based on the chosen significance level (α) and the distribution type of the test statistic (e.g., normal, t-distribution). Commonly used significance levels are 0.05, 0.01, and 0.10, corresponding to 95%, 99%, and 90% confidence levels, respectively. The critical value can be found using statistical tables or software. For instance, in a Z-test with α = 0.05, the critical value is approximately ±1.96, meaning that if the test statistic exceeds 1.96 or -1.96, the null hypothesis is rejected.
