Robin Inc.feared that the average company loss is running beyond $34,000.It initially conducted a hypothesis test on a sample extracted from its database.The hypothesis was formulated as H₀: average company loss $34,000 vs.H₁: average company loss $34,000.The test resulted in favor of Robin Inc.'s loss not exceeding $34,000.Detailed study of company accounts later revealed that the average company loss had run up to $37,896.Which of the following errors were made during the hypothesis test?
A)Type III error
B)Type II error
C)Type I error
D)Type IV error

Question

Robin Inc.feared that the average company loss is running beyond $34,000.It initially conducted a hypothesis test on a sample extracted from its database.The hypothesis was formulated as H₀: average company loss $34,000 vs.H₁: average company loss > $34,000.The test resulted in favor of Robin Inc.'s loss not exceeding $34,000.Detailed study of company accounts later revealed that the average company loss had run up to $37,896.Which of the following errors were made during the hypothesis test?
A)Type III error
B)Type II error
C)Type I error
D)Type IV error

Quizplus · Accepted Answer

A Type II error occurs when the null hypothesis is not rejected when it is actually false. In this case, the null hypothesis was that the average company loss was $34,000, and it was not rejected, even though the true average loss was $37,896.

Robin IncFeared That the Average Company Loss Is Running Beyond $34,000