Final answer:
The upper probability value allowed for rejecting the null hypothesis is called the significance level, which is the preset α (alpha) and represents the probability of committing a Type I error.
Step-by-step explanation:
The upper probability value allowed for rejecting the null hypothesis is known as the significance level. This is the preset α (alpha), which represents the probability of committing a Type I error—rejecting the null hypothesis when it is actually true. In hypothesis testing, if the p-value of the test is less than or equal to the significance level, we reject the null hypothesis.
For example, if the level of significance is set at 5% (0.05), and the p-value calculated from the test statistic is less than or equal to 0.05, then the decision would be to reject the null hypothesis. On the other hand, a Type II error occurs when the null hypothesis is not rejected even though the alternative hypothesis is true, and thus has a different probability (denoted as β).