TABLE 9-4 A Drug Company Is Considering Marketing a New Local Anesthetic.The

question 5

Multiple Choice

TABLE 9-4
A drug company is considering marketing a new local anesthetic.The effective time of the anesthetic the drug company is currently producing has a normal distribution with a mean of 7.4 minutes with a standard deviation of 1.2 minutes.The chemistry of the new anesthetic is such that the effective time should be normally distributed with the same standard deviation,but the mean effective time may be lower.If it is lower,the drug company will market the new anesthetic; otherwise,they will continue to produce the older one.A sample size of 36 results in a sample mean of 7.1.A hypothesis test will be done to help make the decision.
-Referring to Table 9-4,the appropriate hypotheses are

• A)H₀ : μ = 7.4 versus H₁ : μ ≠ 7.4.
• B)H₀ : μ ≤ 7.4 versus H₁ : μ > 7.4.
• C)H₀ : μ ≥ 7.4 versus H₁ : μ < 7.4.
• D)H₀ : μ > 7.4 versus H₁ : μ ≤ 7.4.

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Definitions:

CCA Rate

Refers to Capital Cost Allowance rate, which is the rate at which a business can claim tax depreciation on certain properties or equipment in Canada.

CCA Class

Canadian Capital Cost Allowance Class; a categorization in Canadian tax law that determines the depreciation rate for tax purposes on different types of assets.

Required Rate

The lowest expected gain an investor aims to receive from an investment in a specific asset, taking into account the associated risk.

Fixed Costs

Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance premiums.