Question

A large restaurant is being sued for age discrimination because 15% of newly hired candidates are between the ages of 30 years and 50 years when 50% of all applicants were in that age bracket. You plan to use hypothesis testing to determine whether there is significant evidence that the company's hiring practices are discriminatory. Part A: State the null and alternative hypotheses for the significance test. (2 points) Part B: In the context of the problem, what would a Type I error be

Answer 1

See explanation below.

Explanation:

Let's take P as the proportion of new candidates between 30 years and 50 years

A) The null and alternative hypotheses:

H0 : p = 0.5

H1: p < 0.5

b) Type I error, is an error whereby the null hypothesis, H0 is rejected although it is true. Here, the type I error will be to conclude that there was age discrimination in the hiring process, whereas it was fair and random.

ie, H0: p = 0.5, then H0 is rejected.