Type 1 and Type 2 errors
Type 1 error is a type of error that occurs when there is a rejection of the null hypothesis when it is actually true. This kind of error is also called an error of the first kind and is equivalent to false positives.
Let's understand this concept using an example. There is a new drug that is being developed and it needs to be tested on whether it is effective in combating diseases. The null hypothesis is that it is not effective in combating diseases.
The significance level is kept at 5% so that the null hypothesis can be accepted confidently 95% of the time. However, 5% of the time, we'll accept the rejecttion of the hypothesis ...