Next section: Tests of μ, σ known

The formula is basically a method for calculating the area under the normal curve. If the mean and standard deviation of the sampling distribution of a statistic are known, it is easy to calculate the probability of a statistic being greater than or less than a specific value. That is what is done in hypothesis testing.

(See the section on the area under the sampling distribution of the mean for an example.)

Next section: Tests of μ, σ known