The Average Cost of Tuition, Room and Board at Small

question 99

Multiple Choice

The average cost of tuition, room and board at small private liberal arts colleges is reported to be $8,500 per term, but a financial administrator believes that the average cost is higher. A study conducted using 350 small liberal arts colleges showed that the average cost per term is $8,745 with a standard deviation of $1,200. Let = 0.05. Based on the computed test statistic or p-value, what is our decision about the average cost?

• A) Equal to $8,500
• B) Greater than $8,500
• C) Less than $8,500
• D) Not equal to $8,500

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Definitions:

Marginal Cost

The amount spent on the production of one more unit of a product or service.

Demand Function

A mathematical function showing the relationship between the quantity demanded of a good and its price, holding other factors constant.

Reaction Function

The strategic response of one player in a game to the actions of another, typically used in the context of oligopoly market structures.

Marginal Cost

The increase in total production costs that comes from making one additional unit of a product.