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# Question about Type I and Type II Errors

The Oasis Chemical Company develops and manufactures pharmaceutical drugs for distribution and sale in the United States. The pharmaceutical business can be very lucrative when useful and safe drugs are introduced into the market. Whenever the Oasis research lab considers putting a drug into production, the company must establish the following sets of null and alternative hypotheses:

Set 1 Set 2
Ho: The drug is safe Ho: The drug is effective
Ha: The drug is not safe Ha: The drug is not effective

a. For each set of hypotheses, describe what circumstances would suggest that a Type I error would be of more concern. Carefully Explain.

b. For each set of hypotheses, describe what circumstances would suggest that a Type II error would be of more concern. Carefully Explain.

#### Solution Preview

There are two types of errors in statistics. A type I error (an &#945; error) is a false positive. You make this kind of error when you reject a null hypothesis when it is actually true. A type II error (a &#946; error) is a false negative. You make this kind of error when you fail to reject the null hypothesis when you should (i.e. when the alternative hypothesis is true, and the null hypothesis is not).

a) Type I errors. These are more likely to happen if you use a low value of ...

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