Q: For each question, discuss the cost of making each type of error.
1. A customer purchases an item. Once they exit the store, the alarm goes off. This alarm goes off routinely for paying customers.
2. A patient is diagnosed as negative when a doctor determines whether or not they are showing symptoms of a virus. The patient actually exhibits symptoms but is told to carry on with daily activities.
What I think:
1. Type 1 error? We rejected when we shouldn't have. I guess the cost is that the alarm system is not efficient enough to track and distinguish paying customers from non-paying customers.
2. Type 2 error? When we shouldn't have rejected. The cost would be that the person who actually has the virus can risk infecting others and that the test is too inaccurate.
Am I right? I am learning to differentiate between type 1 and type 2 errors.