Consider the Following Scenario When Answering the Questions That Follow

question 132

Multiple Choice

Consider the following scenario when answering the questions that follow:
Jones owns a factory that is dumping toxic waste into a river where Smith owns a resort.At present,Jones is not filtering the water that he dumps into the river.There is a filter he could install that would remove a significant amount of the toxic elements from the water before it is dumped in the river.Jones and Smith have each assessed the situation and come up with the following data:

-A cattle rancher and a wheat farmer own adjacent properties that may or may not be separated by a fence.The accompanying table identifies the annual profit received by each party in the event there is,or there is not,a fence.If there is no fence,one can be installed and maintained at an annual cost of $25,000. If legal rights are assigned to the wheat farmer so that the cattle rancher is liable for any damage caused by his cattle to the wheat crop,then the:

• A)rancher will choose to close his ranch.
• B)farmer will not allow the rancher to stay in business.
• C)rancher will pay to build the fence.
• D)rancher will choose to compensate the farmer for damages.
• E)rancher will be indifferent toward neither building the fence nor compensating the farmer for damages.

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Definitions:

Sampling Distribution

A distribution indicating the probabilities of a statistic, which is calculated from a random sample.

Sample Proportion

The fraction of the sample that represents a particular attribute or characteristic.

Normal Probability Distribution

A bell-shaped distribution characterized by its mean and standard deviation, representing a continuous random variable.

Central Limit Theorem

A statistical theory that states that the distribution of sample means approximates a normal distribution as the sample size becomes larger, regardless of the population's distribution.