Question

A pharmaceutical company has a new drug which relieves headaches. However, there is some indication that the drug may have the side effect of increasing blood pressure. Suppose the drug company conducts a hypothesis test to determine whether the medication raises blood pressure. The hypotheses are:

H₀: The drug does not increase blood pressure.
H_a: The drug increases blood pressure.

Answer the following questions completely:

1. Do you think that for doctors and patients it is more important to have a small α probability or a small β probability? Why?

2. Do you think that the pharmaceutical company would prefer to have a small α probability or a small β probability? Why?

Question 16 options:

Answer 1

In the given problem, is the probability of rejecting H0 given that the drug does not increase blood pressure (H0 is true).

is the probability of not rejecting H0 given that the drug does increases blood pressure (H0 is false).

For doctors and patients it is more important, to reject H0 in case the drug does increases blood pressure so as to avoid serious consequences to patients and reputation of doctors. So the probability of rejecting H0 given that the drug does increases blood pressure should be high. In other words,  the probability of not rejecting H0 given that the drug does increases blood pressure should be low. So, it is more important to have small for doctors and patients .

The pharmaceutical company should be more interested in profits of the company. For pharmaceutical company it is more important, to not reject H0 in case the drug does not increases blood pressure, so as to maximize its profit. So, the probability of not rejecting H0 given that the drug does not increases blood pressure should be high. In other words,  the probability of rejecting H0 given that the drug does not increases blood pressure should be low. So, it is more important to have small for pharmaceutical company.