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Economics Question on Quantitative Economics

What is the difference between a Type I error and a Type II error?

A

A Type I error is the error of rejecting the null hypothesis when it is true, while a Type II error is the error of failing to reject the null hypothesis when it is false.

B

A Type I error is the error of accepting the null hypothesis when it is false, while a Type II error is the error of rejecting the null hypothesis when it is true.

C

A Type I error is the error of overestimating the population mean, while a Type II error is the error of underestimating the population mean.

D

A Type I error is the error of overestimating the population proportion, while a Type II error is the error of underestimating the population proportion.

Answer

A Type I error is the error of rejecting the null hypothesis when it is true, while a Type II error is the error of failing to reject the null hypothesis when it is false.

Explanation

Solution

The correct option is (A): A Type I error is the error of rejecting the null hypothesis when it is true, while a Type II error is the error of failing to reject the null hypothesis when it is false.