A fast-food franchise is considering building a restaurant at a busy intersection.A financial advisor determines that the site is acceptable only if,on average,more than 300 automobiles pass the location per hour.The advisor tests the following hypotheses: H_o: μ ≤ 300. H_A: μ 300. The consequences of committing a Type I error would be that____________________________. A) the franchiser builds on an acceptable site B) the franchiser builds on an unacceptable site C) the franchiser does not build on an acceptable site D) the franchiser does not build on an unacceptable site

Question

A fast-food franchise is considering building a restaurant at a busy intersection.A financial advisor determines that the site is acceptable only if,on average,more than 300 automobiles pass the location per hour.The advisor tests the following hypotheses: H_o: μ ≤ 300. H_A: μ > 300. The consequences of committing a Type I error would be that____________________________. A) the franchiser builds on an acceptable site B) the franchiser builds on an unacceptable site C) the franchiser does not build on an acceptable site D) the franchiser does not build on an unacceptable site

Quizplus · Accepted Answer

A Type I error occurs when the null hypothesis (in this case, μ ≤ 300) is rejected, even though it is true. In the context of the problem, this would mean that the financial advisor incorrectly concludes that there are more than 300 automobiles passing the location per hour, when in fact there are not. This would lead to the franchiser building on an unacceptable site, which would be a costly mistake. Therefore, the best choice is B - the franchiser builds on an unacceptable site.

A Fast-Food Franchise Is Considering Building a Restaurant at a Busy