Step 1: Understanding the Concept:
The critical region (rejection region) contains the set of all outcomes of a test statistic that lead to the rejection of the null hypothesis.
Step 2: Detailed Explanation:
The null hypothesis $H_0$ usually specifies a state of no difference or no effect (e.g., $H_0: \mu = \mu_0$).
The alternative (alternate) hypothesis $H_1$ defines the direction of the deviation we are looking for:
- Two-sided test: The alternative hypothesis is non-directional ($H_1: \mu \neq \mu_0$). The rejection region is split between both the lower and upper tails of the distribution.
- One-sided test: The alternative hypothesis is directional ($H_1: \mu > \mu_0$ or $H_1: \mu < \mu_0$). The rejection region lies entirely in a single tail of the distribution.
Therefore, whether a critical region is one-sided or two-sided is determined entirely by the Alternate Hypothesis.
Step 3: Final Answer
The correct option is (B).