Carpetland salespersons average $8,000 per week in sales. Steve Contois, the firm’s vice president, proposes a compensation plan with new selling incentives. Steve hopes that the results of a trial selling period will enable him to conclude that the compensation plan increases the average sales per salesperson.

a. Develop the appropriate null and alternative hypotheses.

b. What is the Type I error in this situation? What are the consequences of making this error?

c. What is the Type II error in this situation? What are the consequences of making this error?