Carpetland salespersons average $8000 in sales per week. SteveContois, the firm’s vice president, proposes a compensation planwith new selling incentives. Steve hopes that the results of atrial selling period will enable him to test whetherthe compensation plan would be effective. Beforeanswering the following questions, you will need to first formulatethe appropriate null and alternative hypotheses. a. What is theType I error in this situation? What are the consequences of makingthis error? b. What is the Type II error in this situation? Whatare the consequences of making this error? c. Sincethere is money involved in the proposed plan, Steve would like tohave a more stringent test by imposing a lower significance level.As a student of Statistics, do you think this is a good idea?Explain.
