Question

A new cold & flu drug is being tested for possible side effects. It is assumed that the drug is safe, and the tests are looking for evidence to show that it’s unsafe, specifically that it has “turns your hair purple” as a possible side effect. In other words:

H0: The drug is completely safe.

H1: The drug causes your hair to turn purple.

If you work for the pharmaceutical company developing this drug, what would it mean to make a Type I error in this context?

If you work for the pharmaceutical company developing this drug, what would it mean to make a Type II error in this context?

If you work for the pharmaceutical company developing this drug, would you rather make a Type I error or a Type II error? Why?

Answer 1

If you work for the pharmaceutical company developing this drug, what would it mean to make a Type I error in this context?

Type I occurs when the null hypothesis is rejected incorrectly.
If type I occurs by a drug maker this means though the drug is not unsafe we are declaring it as unsafe.

If you work for the pharmaceutical company developing this drug, what would it mean to make a Type II error in this context?

type II error occurs when we incorrectly fail to reject the null hypothesis.
In this case, tough the drug is unsafe it is being declared as safe.

If you work for the pharmaceutical company developing this drug, would you rather make a Type I error or a Type II error? Why?

Type II error has severe consequences that type I.
Because if we roll out the drug and it is unsafe for consumption this will cost the repulation of the company or may be some lives