Final answer:
When regulators revoke a shop's license incorrectly, they commit a Type I error. A Type II error is when they don't revoke a license for a shop falsely certifying cars.
Step-by-step explanation:
A Type I error occurs when a true null hypothesis is incorrectly rejected, while a Type II error happens when a false null hypothesis is not rejected. If regulators revoke a license for a shop that is certifying cars correctly, they are committing a Type I error, because they have rejected the true state of affairs where the shop is compliant with the standards. Conversely, if regulators fail to revoke the license of a shop that is incorrectly certifying cars, a Type II error would occur because they have failed to reject a false null hypothesis.