week 4 DQ 4

Statistics
Tutor: None Selected Time limit: 1 Day

Why does the significance level differ among industries? Will the null hypothesis be more likely to be rejected at α = 0.01 than α = 0.10? As the significance level increases to α = 0.10 from α = 0.01, which type error is more likely to occur? What can be done to reduce the likelihood of incurring this error?

Jun 30th, 2015

Thank you for the opportunity to help you with your question!

There are many factors that contribute to this difference and most importantly, we need to know what we are looking at among industries, for example, gross production, revenue, interest, etc.

At lower p value, we are more confident at rejecting null hypothesis. At alpha=0.01, null hypothesis is more likely to be rejected than alpha = 0.1 

Type I error is more likely to occur when the significance level rises. Type I error is the error made when p value is low, we reject null hypothesis, which may not be rejectable if p level rises.

To reduce error: increase the sample size

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 30th, 2015

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