A consumer advocacy group claims that the mean mileage for the Carter Motor Company's new sedan is less than 32 miles per gallon. What would be the type I error for the test?
Type I error = rejecting null hypothesis even if it is true.
In this case, null hypothesis is that mean is not less than 32.
Hence, type I error is to conclude that the true mean is less than 32 miles per gallon, even though it is not.
This could lead to a lawsuit where the Carter Motor Company might have to pay a fine even though they are innocent.