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According to CreditReport.com, the mean credit score in Georgia for 2011 was 668. Suppose that a hypothesis test is conducted to determine whether the mean credit score in Georgia has decreased since that time. Describe what a Type I error would mean in the context of this problem.

Question

According to CreditReport.com, the mean credit score in Georgia for 2011 was 668. Suppose that a hypothesis test is conducted to determine whether the mean credit score in Georgia has decreased since that time. Describe what a Type I error would mean in the context of this problem.

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Solution

A Type I error in the context of this problem would mean that you reject the null hypothesis when it is actually true. In other words, you would conclude that the mean credit score in Georgia has decreased since 2011, when in reality, it has not. This could lead to incorrect decisions or actions based on the belief that the average credit score has dropped.

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