A company that sells eco-friendly cleaning products is concerned that only 19.5% of people who use such products select their brand. A marketing director suggests that the company invest in new advertising and labeling to strengthen its green image. The company decides to do so in a test market so that the effectiveness of the marketing campaign may be evaluated.
In this context, committing a Type I error
I. Occurs when they conclude that the percentage of customers purchasing the company’s brand has increased when in fact it has not.
II. Occurs then they conclude that the percentage of customers purchasing the company’s brand has not increased when in fact it has.
III. Would result in the company wasting money on a new marketing campaign that does not increase the percentage of customers buying their brand.
A)I only
B)II only
C)III only
D)Both I and III

Question

Quizplus · Accepted Answer

A Type I error occurs when a false positive result is concluded, meaning the company believes the new marketing campaign is effective when it is not, leading to unnecessary expenditure (I and III). Type II error, not listed here, would involve failing to detect a true effect (II).

A Company That Sells Eco-Friendly Cleaning Products Is Concerned That