# Question

All drugs must be approved by the U.S. Food and Drug Administration (FDA) before they can be marketed by a drug company. The FDA must weigh the error of marketing an ineffective drug, with the usual risks of side effects, against the consequences of not allowing an effective drug to be sol

d. Suppose, using standard medical treatment, that the mortality rate (r) of a certain disease is known to be

A. A manufacturer submits for approval a drug that is supposed to treat this disease. The FDA sets up the hypothesis to test the mortality rate for the drug as (1) Ho: r = A, Ha: r < A, a = 0.005 or (2) Ho: r = A, Ha: r > A, a = 0.005

a. If A = 0.95 which test do you think the FDA should use? Explain.

b. If A = 0.05 which test do you think the FDA should use? Explain.

d. Suppose, using standard medical treatment, that the mortality rate (r) of a certain disease is known to be

A. A manufacturer submits for approval a drug that is supposed to treat this disease. The FDA sets up the hypothesis to test the mortality rate for the drug as (1) Ho: r = A, Ha: r < A, a = 0.005 or (2) Ho: r = A, Ha: r > A, a = 0.005

a. If A = 0.95 which test do you think the FDA should use? Explain.

b. If A = 0.05 which test do you think the FDA should use? Explain.

## Answer to relevant Questions

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