Complete Question:
Halloween City considers opening a store at Stony Brook University for Halloween 2020. Before going ahead with that plan, the marketing research department at Halloween City is asking a random sample of 200 SBU students about their likelihood of getting costumes at the store. If more than 50% of the participants indicate that they would shop there then Halloween City will go ahead and open a store on campus for Halloween in 2020. What would be the consequences of a type II error in this setting?
1. They will open a store although less than 50% of the participants would shop there.
2. They will open a store since 50% of the participants would shop there
3. They will not open the store although more than 50% of the participants would shop there
4. They will not open the store since less than 50% of the participants would shop there
5. They will open a store since more than 50% of the participants would shop there
Answer:
The consequences of a type II error in this setting are:
1. They will open a store although less than 50% of the participants would shop there.
3. They will not open the store although more than 50% of the participants would shop there.
Explanation:
When Halloween City accepts the null hypothesis indicating that more than 50% of the participants would shop at the new store whereas that is actually false, a type II error occurs. This type II error produces a false negative. It is also known as an error of omission because this hypothesis is accepted whereas it should have been rejected.