Duke Energy reported that the cost of electricity for an efficient home in a particular neighborhood of Cincinnati, Ohio, was $104 per month. A researcher believes that the cost of electricity for a comparable neighborhood in Chicago, Illinois, is higher. A sample of homes in this Chicago neighborhood will be taken and the sample mean monthly cost of electricity will be used to test the following null and alternative hypotheses.
- a. Assume the sample data lead to rejection of the null hypothesis. What would be your conclusion about the cost of electricity in the Chicago neighborhood?
- b. What is the Type I error in this situation? What are the consequences of making this error?
- c. What is the Type II error in this situation? What are the consequences of making this error?
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