In Cities and Towns on the Borders Between States There

Essay

In cities and towns on the borders between states there is a significant amount of flight across state lines to avoid high state taxes on gasoline. Some states (such as Iowa) have large rivers for borders and tolls to cross the bridges. Do these tolls impede traffic to other states to get cheaper gasoline? To test this hypothesis, an experimental Toll-Free Week will be instituted at the Farmington Bridge, where currently 50 cars per day drive out of the state. Let μ denote the true average number of border crossings per day at Farmington if there were no toll.
a) What is the appropriate null hypothesis?
b) What is the appropriate alternative hypothesis?
c) In your own words, distinguish between a Type I and a Type II error in this context.