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Expert-verified Found in: Page 442 ### Statistics For Business And Economics

Book edition 13th
Author(s) James T. McClave, P. George Benson, Terry Sincich
Pages 888 pages
ISBN 9780134506593 # If the rejection of the null hypothesis of a particular test would cause your firm to go out of business, would you want ${\mathbit{a}}$ to be small or large? Explain

The firm would want $a$ to be small.

See the step by step solution

## Given information

The rejection of the null hypothesis of a particular test would cause a firm to go out of business.

## State level of significance

Significance level $\left(a\right)$:

The level of significance is the size of the type I error. In other words, rejecting the null hypothesis when it is true.

i.e., $a=P\left(reject{H}_{0}/{H}_{0}istrue\right)$

## Explain about the a, is small or large

If a null hypothesis rejection resulted in a farm going out of business, that firm would put in significant effort ensuring that it does not falsely identify a null hypothesis as correct. So, which is a type I error. Since, $a$ symbolizes this type I error.

Hence, the firm would want $a$ to be small. ### Want to see more solutions like these? 