1 i am deciding on whether to invest 400000 cad to open a

Question

1. I am deciding on whether to invest 400,000 CAD to open a convenience store in particular spot in Ottawa. I know that the business will be profitable, with income of 70,000 CAD per year, if the store will have in average μ = 60 or more customers per day. If I am convinced that the business will be profitable then I will go ahead and open the store otherwise I won't. Hence I am dealing with this hypothesis testing problem. complete solutions correct answers key

H0 : μ = 60 vs Ha : μ < 60

(A) Explain what Type I error means in the context of this problem.

(B) What is the consequence of Type I error.

(C) Explain what Type II error means in this context.

(D) What is the consequence of Type II error in the context of this problem.

(E) Which error is more expensive in your opinion. Explain.

Answer 1

As describing the assignment should be in given formatting as per guidelines as well make it more effective. 1. I am deciding on whether to invest 400,000 CAD to open a convenience store in particular spot in Ottawa. I know that the business will be profitable, through income of 70,000 CAD per year, if the store will have in average µ = 60 or more customers per day. If I am convinced that the business will be profitable then I will go further on and open the store otherwise I won't. Therefore I am dealing through this hypothesis testing problem. Complete solutions correct answers key H0 : µ = 60 vs Ha : µ < 60 (A) Explicate what Type I error means in the context of this problem. (B) What is the effect of Type I error. (C) Describe what Type II error means in this context. (D) What is the outcome of Type II error in the context of this problem. (E) Which error is more exclusive in your opinion. Explicate.