Question

Carpetland salespersons average $8,000 per week in sales. Steve Contois, the firm’s vice president, proposes a compensation plan with new selling incentive. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increase 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?

Answer 1

Answer with Step-by-step explanation:

Since we have given that

Average per week in sales = $8000

Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increase the average sales per salesperson

So, the appropriate null and alternate hypothesis would be

$H_0:\mu=8000\\\\H_a:\mu>8000$

b. What is the Type I error in this situation? What are the consequences of making this error?

Type 1 error are those errors in which null hypothesis are supposed to be rejected, but it does not get rejected.

It means sales per week is greater than $8000 but in actual it is not.

c. What is the Type II error in this situation? What are the consequences of making this error?

Type 2 are error are those errors in which null hypothesis are supposed to be accepted but it get rejected.

It means average sales per week is actually $8000 but it is calculated that average sales is less than $8000.