Developing the null and alternative hypotheses, Type I and II errors, interpreti
ID: 3156886 • Letter: D
Question
Developing the null and alternative hypotheses, Type I and II errors, interpreting p-values A Bureau of Labor Statistics (BLS) economist conducts a statistical study to test his hunch that in households with a minimum-wage worker, mean household debt increases (spending increases more than income) following a hike in the minimum wage. The economist formulates the null hypothesis as: In households with a minimum-wage worker, mean household debt is unaffected by a hike in the minimum wage. In households with a minimum-wage worker, mean household debt increases following a hike in the minimum wage. In households with a minimum-wage worker, mean household debt decreases following a hike in the minimum wage. In households with a minimum-wage worker, mean household debt decreases or stays the same following a hike in the minimum wage. The economist commits a Type II error if he concludes that: Mean debt does not increase following a minimum-wage hike when it actually does. Mean debt increases following a minimum-wage hike when it actually does not. Suppose that the economist conducts the hypothesis test and uses the value of the test statistic to compute a p-value for the test. The p-value is 0.06. Using the guidelines suggested by statisticians for interpreting small p-values, the sample data provide evidence against the null hypothesis.Explanation / Answer
a) the null hypothesis that the debt remains unaffected with the increase in pay hike
therefore option A is correct
b) type 2 error occurs when we fail to reject the false null hypothesis.
there the conclusion will be that the debt does not increase when it actually does
option A is correct
c) as the p value = 0.06
therefore we can say we have a weal evidence againt the null hypothesis
hence according to our null hypothesis
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