1. A car manufacturer is concerned about poor customer satisfaction at one of its dealerships. The management decides to evaluate the satisfaction surveys of its next 40 customers. The dealer will be fined if the number of customers who report favorably is between 22 and 26. The dealership will be dissolved if fewer than 22 customers report favorably. It is known that 70% of the dealer's customers report favorably on satisfaction surveys.

a. What is the probability that the dealer will be fined?

b. What is the probability that the dealership will be dissolved?

2. The manager of a large manufacturing firm is considering switching to new and expensive software that promises to reduce its assembly costs. Before purchasing the software, the manager wants to conduct a hypothesis test to determine if the new software does reduce its assembly costs.

a. Would the manager of the manufacturing firm be more concerned about a Type I error or a Type II error? Explain.

b. Would the software company be more concerned about a Type I error or a Type II error? Explain.