1: What is the importance of a 5% significance level? Why would you choose 5% as opposed to 10% or 1%? What effect does the level of significance have on a Type II error? Please give examples of business situations that would call for different levels of significance.
2: What is the difference between a left-tailed, two-tailed, and right-tailed test. When would you choose a one-tailed test? How can you determine the direction of the test by looking at a pair of hypotheses? How can you tell which direction (or no direction) to make the hypothesis by looking at the problem statement (research question)?