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Carpetland salespersons average $8000 per week in sales. Steve Contois, the firm’s vice president, proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increases the average sales per salesperson. a. Develop the appropriate null and alternative hypotheses. 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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STATISTICS F/BUSINESS+ECONOMICS-TE...

13th Edition
Anderson
Publisher: CENGAGE L
ISBN: 9781305881884

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BuyFindarrow_forward

STATISTICS F/BUSINESS+ECONOMICS-TE...

13th Edition
Anderson
Publisher: CENGAGE L
ISBN: 9781305881884
Chapter 9.2, Problem 7E
Textbook Problem
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Carpetland salespersons average $8000 per week in sales. Steve Contois, the firm’s vice president, proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increases the average sales per salesperson.

  1. a. Develop the appropriate null and alternative hypotheses.
  2. b. What is the Type I error in this situation? What are the consequences of making this error?
  3. c. What is the Type II error in this situation? What are the consequences of making this error?

a.

To determine

Identify the null and alternative hypotheses.

Explanation of Solution

Here, the compensation plan increases the average sales per salesperson. This can be written as μ>8,000. The complement of the claim is, μ8,000. In the given experiment, the alternative hypothesis indicates the claim

b.

To determine

Identify the Type I error in the given situation and identify the consequences of making this error.

c.

To determine

Identify the Type II error in the given situation and identify the consequences of making this error.

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Chapter 9 Solutions

STATISTICS F/BUSINESS+ECONOMICS-TEXT
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