1 The marketing team of a company desires to test whether the average monthly sales is...

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1 The marketing team of a company desires to test whether the average monthly sales is 30 lakhs (as was targeted) or less than 30 lakhs. One person from the team collects a sample of same size 10. A second person from the team selects another sample of the same size. The first person rejects the null if her sample mean is less than K, and the second person rejects the null if her sample mean is less than L. The team leader finds that K > L. a) Who is testing at a lower significance level? Why? b) Who has a higher chance of committing type II error? Why? c) What should the person, testing with a higher significance level, do to reduce her significance level to that of the other keeping the decision rule same? Why? d) Suppose a = 0.05. If type I error occurs, the company spends 5 lakhs per month on advertisement for increasing the average sales. On the other hand, if type II error occurs with maximum probability, the company loses 100,000. Which type of error is more important for the company? Why? 1 The marketing team of a company desires to test whether the average monthly sales is 30 lakhs (as was targeted) or less than 30 lakhs. One person from the team collects a sample of same size 10. A second person from the team selects another sample of the same size. The first person rejects the null if her sample mean is less than K, and the second person rejects the null if her sample mean is less than L. The team leader finds that K > L. a) Who is testing at a lower significance level? Why? b) Who has a higher chance of committing type II error? Why? c) What should the person, testing with a higher significance level, do to reduce her significance level to that of the other keeping the decision rule same? Why? d) Suppose a = 0.05. If type I error occurs, the company spends 5 lakhs per month on advertisement for increasing the average sales. On the other hand, if type II error occurs with maximum probability, the company loses 100,000. Which type of error is more important for the company? Why?