16. Suppose the national average dollar amount for an automobile insurance claim

Question

16. Suppose the national average dollar amount for an automobile insurance claim is $738.8. You work for an agency in Michigan and you are interested in whether or not the state average is less than the national average. The hypotheses for this scenario are as follows: Null Hypothesis: 738.8, Alternative Hypothesis: < 738.8. Suppose the true state average is $955.21 and the null hypothesis is not rejected, did a type I, type II, or no error occur?

Question 16 options:

1)

2)

3)

4)

5)

1)

We do not know the p-value, so we cannot determine if an error has occured.

2)

We do not know the degrees of freedom, so we cannot determine if an error has occured.

3)

Type II Error has occured

4)

Type I Error has occured.

5)

No error has occured.

Explanation / Answer

Since here the null hypothesis is not rejected whereas it should have been rejected. we are facing type 2 error. option 3

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