Your company is sued for job discrimination. Based on the

 

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:

  1. Would you use a one-tailed or two-tailed test? Why?
  2. What would a Type I error be? What would a Type II error be?
  3. If the hypothesis is tested at the 5% significance instead of 10%, how will the power of the test be affected?
  4. 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?
  5. Based on the analysis you did, what your next step should be?

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