We have to find two rupes of error i.e.type I error and type II error.
Error probability corresponds to one of those.
Further we have,
Hence, type I error is 0.05 and type II error is 0.20.
While we perform hypothesis testing, our aim is to minimise type of errors. But with decrease of one error, other incresses and vice-versa. Between the errors, type I is more severe. So, kepping it at a low level we try to minimise type II error. If we use a smaller sample size, probabilities of these errors increase which is not at all desirable. Hence, we should not use a smaller sample size.
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