Business Finance Homework Help

Consider the situation where a husband and wife go to the doctor’s office to each get some tests run and the doctor accidently mixes up their charts. The doctor comes into the exam room with the results of the tests and declares that the wife is NOT pregnant but her husband IS indeed pregnant with a baby.

How does this illustrate the concepts behind Type I and Type II errors?

With this situation in mind, what type of error (Type I or Type II) is worse?  Explain your reasoning.