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    Calculation of type I and type II error

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    2. Two different companies have applied to provide cable television service in a certain region. Let p denote the proportion of all potential subscribers who favor the first company over the second. Consider testing H0 : p = .5 vs HA : P ≠ .5 based on a random sample of 25 individuals. Let X denote the number in the sample who favor the first company and x represent the observed value of X.

    i. Which of the following rejection regions is most appropriate and why?

    R1 = {x : x < 7 or x > 18}
    R2 = {x : x < 8}
    R3 = {x : x>17}

    ii. In the context of this problem situation, describe what type I and type II errors
    are.

    iii. Compute the probability of a type II error for the selected region in part (a)
    when p = .3, p = .4, p = .5, and p = .6.

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    Solution Preview

    i)
    Consider 95% confidence interval
    P( |x - np / &#8730;npq | < 1.96) = .95
    |x - 25*0.5 / &#8730;25*.5*.5 | < 1.96
    |x - 12.5 / 2.5 | < 1.96
    | x - 12.5 | < 4.9
    -4.9 < x - 12.5 ...

    Solution Summary

    The solution calculates type I and type II error.

    $2.19

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