In: Statistics and Probability
An airline claims that the no-show rate for passengers is less than 5%. In a sample of 420 randomly selected reservations, the rate of no-show is 4.5%. Set up the null and alternative hypothesis to test this claim. Describe what type 1 error and type 2 error are in this case. Find the test statistic and make a decision at 5% level of significance.
Here claim is that p<0.05
So hypothesis is vs
Type 1 error is that p is not less than 0.05, but we conclude it that it is p<0.05
Type 2 error is that p is less than 0.05, but we conclude that it is not less than 0.05
So test statistics is
P value is
As P value is greater than alpha we fail to reject the null hypothesis
Hence we do not have sufficient evidence to support the claim that p<0.05