A fast food franchiser is considering building a restaurant at a certain location. Accord- ing to a nancial analysis, a site is acceptable only if the number of pedestrians passing the location averages more than 100 per hour. A random sample of 50 hours produced x = 110 and s = 12 pedestrians per hour.
a. Do these data provide sucient evidence to establish that the site is acceptable? Use = 0:05.
b. What are the consequences of Type I and Type II errors? Which error is more expensive to make?
c. Considering your answer in part (b), should you select to be large or small? Explain.
d. What assumptions about the number of pedestrians passing the location in an hour are necessary for your hypothesis test to be valid?