3) CarpetPlace salespersons average $5,000 per week in sales. Steve Jobs, the fi

Question

3) CarpetPlace salespersons average $5,000 per week in sales. Steve Jobs, the firm’s vice president, proposes a new compensation plan with selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the new 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?

Explanation / Answer

a) null and alternative hypotheses.

H0: 8000

Ha:> 8000 (do Ha first)

b) Concluding the new plan is better when it isn’t.Cost of implementing the new plan.

c) Not adopting the new plan which is actually better.Not benefitting from a better plan

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