Question

Can you please thoroughly answer these questions:

1.   Explain the incentives faced by a Federal Drug Administration drug inspector whose actions and deliberations will determine whether a drug is allowed to be produced or sold to Americans. How is it possible for them to ignore those who die from the delayed introduction of a drug? Make sure to distinguish between Type I and Type II errors.

2.       What is the difference between an invention and an innovation? Explain why inventions may not become commercially viable and why innovations are adopted. Explain the likely future of innovations. That is, have we run out of commercial ideas, or is the bank of ideas ever-increasing?

3.       Who is likely to have better information about consumer safety and the strongest incentive to safely provide air travel services that satisfy consumers: airlines or FAA regulators? Would you feel safer flying in Air Force One or a regularly scheduled flight, both of which are regulated by the FAA and why?

4.       The wealth of a nation can come from tangible and intangible sources and resources. Explain which is likely to be most important in wealthy nations like the United States? What role do property rights enforcement and enforcement of contracts have in generating wealth?

Answer 1

Ans.1

In statistical parlance , Type 1 Error refers to the situation when a true is rejected and Trype 2 Error refers to a situation when a False is approved.
In the given situation for the FDA inspector:
Type 1 Error will be situation when he rejects a drug which is meeting FDA requirements
Type 2 Error will be situation when he accepts a drug which is not meeting FDA requirements

For the situations like this , it is very important to avoid Type 2 error because once a drug a released in the market, the consequence of not detecting the Type 2 error can be very high. So the FDA inspector is justified in Type 1 error to save many more lives which may occur due to Type 2 error.