Manag., July-2018 – Q44
0. Which one of the following possibilities leads to Type I error in hypothesis testing?
- Option : A
- Explanation : Two types of errors in Hypothesis Testing
It is necessary to know that when a hypothesis is tested, there are four possibilities:
1. The hypothesis is true but our test leads to its rejection.
2. The hypothesis is false but our test leads to its acceptance.
3. The hypothesis is true and our test leads to its acceptance.
4. The hypothesis is false and our test leads to its rejection.
Of these four possibilities, the first two lead to erroneous decisions. The first possibility leads to a Type I error and the second possibility leads to a Type II error. This can be shown as follows:
Table: Types of Errors in Hypothesis Testing
Table indicates that one of the two conditions (states of nature) exists in the population, i.e., either the null hypothesis is true or it is false. Similarly, there are two decision alternatives: Accept the null hypothesis or reject the null hypothesis. Thus, two decisions and two states of nature result into four possibilities.State of nature Decision H0 is true (S1) H0 is false (S2) Accept H0(A1) Correct decision Type II error (β) Reject H0(A2) Type I error (α) Correct decision
If any hypothesis testing the researcher runs the risk of committing Type I and Type II errors. In case we are interested in reducing the risk of committing a Type I error, then we should reduce the size of the rejection region or level of significance, indicated in Table.
