Question

6) For the following problems, identify the hypotheses, define Type I and Type II errors, and discuss the consequences of each error. (When you set up the hypotheses, consider which is the hypothesis you are ”trying to prove”, and that is your alternative. The null hypothesis is then the status quo.)

a. The FDA judges the safety of new drugs. When faced with a new drug, there are two possible decisions: approve the drug or disapprove the drug.

b. You are faced with two investments. One is very risky, but potential returns are high, while the other one is safe but the potential is quite limited. Pick one.

c. You are an airline pilot. You smell smoke in the cockpit, and the nearest airport is less than 5 minutes away. Should you land the plane immediately?

Answer 1

Answer:

a)

Alternative hypothesis:

New medications are not protected.

Type I blunder will emerge in the event that I dismiss the invalid speculation when the new medications are really protected.

I will dismiss the safe new medications.

The sort II mistake is the point at which I don't dismiss invalid speculation when the new medications are not really sheltered. as an outcome of sort II mistake, I will favor the dangerous new medications.

b)

Alternative hypothesis:

Limited speculation and Risky venture, the two yields are not same.

Type I blunder - I get an opportunity of 5% all in all to dismiss the case of the distinction in two yields are same when there is very critical contrast in their mean return.

I may finish up picking both of the two ventures as both are same in returns.

Type II mistake I don't dismiss the invalid speculation when there is really critical distinction in their mean return. so I will interest in low return and win lesser cash.

c)

Alternative hypothesis:

Aero plane won't get fire mishap in 5 minutes.

I ought not arrive the plane right away.

Type I blunder, I will meet with a mishap by dismissing the invalid speculation when it is valid.

It implies that the flame mishap in that aero plane was certain however I didn't arrive as though believing that my elective speculation is false.

Type II despite the fact that there is a higher possibility of flame mishap, and the invalid theory is false, yet I neglect to dismiss the invalid speculation. I will meet with a mishap.