A Large University Claims That the Average Cost of Housing

question 14

Essay

A large university claims that the average cost of housing within three miles of the campus is $6900 per school year. A high school student is preparing her budget for her freshman year at the university. She is concerned that the university's estimate is too low. Having taken AP Statistics, she decides to perform the following test of hypothesis: H₀: = 6900 versus H_a: > 6900, where represents the average cost of housing per year within three miles of the university.
Describe the Type I error for this problem.
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Describe the Type II error for this problem.
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Which error has more serious consequences for the student?
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Definitions:

Direct Labor-hours

The total hours worked by employees that can be directly associated with the production of goods or services.

Manufacturing Overhead

All indirect costs related to the production process, including salaries, maintenance, and utilities, not directly attributable to specific units produced.

Unit Product Cost

The total cost to produce one unit of a product, calculated by dividing the total production costs by the number of units produced.

Direct Labor-hours

The total hours of labor directly involved in manufacturing a product or providing a service, typically used as a basis for allocating overhead costs.