1. We usually take action on the basis of having rejected the null hypothesis. When we do this, we know the chances that the action has been taken erroneously because we have prespecified a, the probability of rejecting a true null hypothesis. Here, it is obviously important to know (prespecify) a, the probability of a Type I error. When is it important to know the probability of a Type II error? Explain why.

2. Explain why we are able to compute many different values of b, the probability of a Type II error, for a single hypothesis test.

3. Explain what is meant by

a. A serious Type II error.

b. The power of a statistical test.

4. In general, do we want the power corresponding to a serious Type II error to be near 0 or near 1? Explain.

Text Book: Business Statics in Practice By BOWERMAN.