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Type II Error and the power of a test

In this video, we bring the concepts of Type I error, Type II error, and statistical power to life with a practical example. We'll work through this scenario: A bank increased referral commissions, expecting the referral rate to jump from 23% to 30%. They sampled 400 new customers and found a 27% referral rate. We will: (a) Test if this is significant evidence of an increase at the 1% level. (b) Calculate the power of this test against the expected 30% increase. This will show you exactly how these theoretical concepts work together in a real hypothesis test.