Eric Roberts, Inc. is a company that specializes in tax-deferred investment opportunities for its clients. Recently,...

Eric Roberts, Inc. is a company that specializes in tax-deferred investment opportunities for its clients. Recently, this company offered a payroll deduction investment program for the employees of a particular company. The company estimates that the employees are currently averaging $110 or less per month in tax-deferred investments. A sample of 80 employees will be used to test the company’s hypothesis about the current level of investment activity among the population of employees. Assume the employee monthly tax-deferred investment amounts have a standard deviation of $70 and that a 0.05 level of significance will be used in the hypothesis test. What is the probability of the Type II error if the actual mean employee monthly investment is $125?

Solutions

Expert Solution

The null and alternate hypothesis are:

H0:

Ha:

Since this is a right tailed test, so the rejection region is given by:

Now,

So,

orchestra answered 1 year ago

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