Question

Your company is sued for job discrimination. Based on the hiring of 20 employees, the plaintiff argues that only 20% of the newly hired candidates were minorities, when 28% of all applicants were minorities. To prepare for the lawsuit you need to decide if this is strong evidence that your company’s hiring practices are discriminatory. Follow these questions: Would you use a one-tailed or two-tailed test? Why? What would a Type I error be? What would a Type II error be? If the hypothesis is tested at the 5% significance instead of 10%, how will the power of the test be affected? The lawsuit is based on the hiring of 20 employees out of 214 new hires over the past 5 years. If the plaintiff used a sample of 40 hires, will the probability of avoiding Type II error increase or decrease? Based on the analysis you did, what your next step should be?

          Your company is sued for job discrimination. Based on the hiring
of 20 employees, the plaintiff argues that only 20% of the newly
hired candidates were minorities, when 28% of all applicants were
minorities. To prepare for the lawsuit you need to decide if this
is strong evidence that your company’s hiring practices are
discriminatory. Follow these questions:
Would you use a one-tailed or two-tailed test? Why?
What would a Type I error be? What would a Type II error
be?
If the hypothesis is tested at the 5% significance instead of
10%, how will the power of the test be affected?
The lawsuit is based on the hiring of 20 employees out of 214
new hires over the past 5 years. If the plaintiff used a sample of
40 hires, will the probability of avoiding Type II error increase
or decrease?
Based on the analysis you did, what your next step should
be?

Added by Tim C.

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