A company is sued for job discrimination because only 19% of the newly hired candidates were minorities when 27% of all applicants were minorities. Is this strong evidence that the company’s hiring practices are discriminatory?
a) Is this a one-tailed or a two- tailed test? Why?
b) In this context, what would a Type I error be?
c) In this context, what would a Type II error be?
d) In this context, what is meant by the power of the test?
e) If the hypothesis is tested at the 5% level of significance instead of 1%, how will this affect the power of the test?
f) The lawsuit is based on the hiring of 37 employees. Is the power of the test higher than, lower than or the same as it would be if it were based on 87 hires?