Question

The mean cost of a daily newpaper is $1.20, and you want to test the hypothesis that it is less than $1.20. Write down H0,HA for this problem and explain what type I and type II errors are in this case.

Answer 1

We want to test the hypothesis that the mean cost of a daily newspaper is less than $1.20

the null & alternative hypothesis:

Ho: The mean cost of a daily newspaper is $1.20

vs

Ha:- the mean cost of a daily newspaper is less than $1.20

1)

Type I error: Reject Null hypothesis when it is true.

We conclude that the mean cost of a daily newspaper is less than $1.20 but actually it is equal to $1.20.

2)

Type II error: - Fail to reject the Null hypothesis when it is False.

We conclude that the mean cost of a daily newspaper is not less than $1.20 but actually it is less than $1.20.