If both type 1 and type 2 errors are costly,
A) set the level of significance very high and increase the sample size
B) set the level of significance very high and decrease the sample size
C) set the level of significance very low and increase the sample size
D) set the level of significance very low and decrease the sample size

Question

Quizplus · Accepted Answer

By setting the level of significance very low, we are reducing the chances of committing a type 1 error (rejecting a true null hypothesis). By increasing the sample size, we are reducing the chances of committing a type 2 error (failing to reject a false null hypothesis). Therefore, the best choice is to set the level of significance very low and increase the sample size.

If Both Type 1 and Type 2 Errors Are Costly