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In Problems \(15-22,(a)\) determine the null and alternative hypotheses, (b) explain what it would mean to make a Type I error, and (c) explain what it would mean to make a Type II error. According to the CTIA-The Wireless Association, the mean monthly revenue per cell phone was \(\$ 48.79\) in 2014 . A researcher suspects the mean monthly revenue per cell phone is different today.

Short Answer

Expert verified
H鈧: \( \mu = 48.79 \), H鈧: \( \mu eq 48.79 \). Type I error: reject true H鈧. Type II error: fail to reject false H鈧.

Step by step solution

01

- Specify the Null and Alternative Hypotheses

Define the null and alternative hypotheses for this problem. The null hypothesis (H鈧) represents the status quo or a statement of no effect. The alternative hypothesis (H鈧) represents a statement of effect or difference. In this case, we test whether the mean monthly revenue per cell phone is different from \(\$ 48.79\) today. H鈧: \( \mu = 48.79 \) H鈧: \( \mu eq 48.79 \)
02

- Explain Type I Error

A Type I error occurs when the null hypothesis is true, but we reject it. In this context, a Type I error means concluding that the mean monthly revenue per cell phone is different from \(\$ 48.79\) when it actually is \(\$ 48.79\).
03

- Explain Type II Error

A Type II error occurs when the null hypothesis is false, but we fail to reject it. In this context, a Type II error means concluding that the mean monthly revenue per cell phone is \(\$ 48.79\) when it actually is different from \(\$ 48.79\).

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Null Hypothesis
In hypothesis testing, the null hypothesis (denoted as \(H_0\)) is a statement asserting that there is no effect or no difference. It's often referred to as the status quo. For the given exercise, our null hypothesis is that the mean monthly revenue per cell phone is still \$48.79 today. This means that the researcher does not expect any changes in the mean revenue since 2014.
If you were to write this formally: \[H_0: \, \mu = 48.79\]
Alternative Hypothesis
The alternative hypothesis (denoted as \(H_1\) or \(H_a\)) is the statement you are trying to find evidence for. It represents the possibility of an effect or difference. In the given exercise, the researcher suspects that the mean monthly revenue per cell phone is different from \$48.79 today.
This can be represented formally as: \[H_1: \,\mu eq 48.79\]
The alternative hypothesis is essentially the opposite of the null hypothesis, offering an alternate theory against the status quo.
Type I Error
A Type I error occurs when the null hypothesis is true, but we mistakenly reject it. In the context of the given exercise, a Type I error would happen if we concluded that the mean monthly revenue per cell phone is different from \$48.79, when in fact, it is still \$48.79.
Type I error is also known as a 'false positive' because it falsely indicates a difference. The probability of making a Type I error is denoted by \(\alpha\), often set at 0.05 (or 5%).
For example:
  • Claiming a new drug works when it doesn鈥檛
  • Concluding there鈥檚 an economic shift when there isn鈥檛
Type II Error
A Type II error occurs when the null hypothesis is false, but we fail to reject it. In this exercise, a Type II error would mean concluding that the mean monthly revenue per cell phone is \$48.79 when, in reality, it is different.
Type II error is also known as a 'false negative' because it fails to detect a real difference. The probability of making a Type II error is denoted by \(\beta\).
For example:
  • Believing a drug does not work when it actually does
  • Failing to detect an economic shift when there is one
Mean Monthly Revenue
Mean monthly revenue is essentially the average amount of money earned per month per cell phone user. For the given exercise, the historical mean monthly revenue was \$48.79 in 2014. This serves as a benchmark for the researcher who suspects there might be a change today.
To calculate mean revenue, you sum up all the revenues for the month and divide by the number of cell phone users. In mathematical terms, if you have revenues \(R_1, R_2, ..., R_n\) for \(n\) users, the mean revenue (\(\mu\)) is:
\[\mu = \frac{R_1 + R_2 + ... + R_n}{n}\]
Understanding mean revenue helps businesses and researchers make important decisions based on data trends.

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