A Sprint Telecom executive believes customers in a market segment are in their late 20s. He chooses and studies a sample of cell phone users with a mean age of 28 years when in fact, the population mean is 38 years. The probability of a Type II error increases as you:
A)set the probability of the wrong population parameter higher
B)set the probability of the wrong population parameter lower
C)set the probability of a Type I error higher
D)set the probability of a Type I error lower

Question

Quizplus · Accepted Answer

The probability of a Type II error increases as you set the probability of a Type I error lower.
Key Takeaway: A Type II error in hypothesis testing is the probability of accepting a null hypothesis when it should be rejected. In this example, the Sprint executive accepts the null hypothesis, which means that he believes the population is younger than it actually is. This has serious implications for business problems or needs as one cannot target a population for which they are missing basic demographic characteristics. The lower the chance of rejecting the null hypothesis in error, the higher the probability of committing a Type II error.

A Sprint Telecom Executive Believes Customers in a Market Segment