TABLE 9-2 a Student Claims That He Can Correctly Identify Whether a Whether

question 22

Multiple Choice

TABLE 9-2
A student claims that he can correctly identify whether a person is a business major or an agriculture major by the way the person dresses. Suppose in actuality that if someone is a business major, he can correctly identify that person as a business major 87% of the time. When a person is an agriculture major, the student will incorrectly identify that person as a business major 16% of the time. Presented with one person and asked to identify the major of this person (who is either a business or an agriculture major) , he considers this to be a hypothesis test with the null hypothesis being that the person is a business major and the alternative that the person is an agriculture major.
-Referring to Table 9-2, what would be a Type I error?

• A) Saying that the person is a business major when in fact the person is a business major
• B) Saying that the person is a business major when in fact the person is an agriculture major
• C) Saying that the person is an agriculture major when in fact the person is a business major
• D) Saying that the person is an agriculture major when in fact the person is an agriculture major

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Definitions:

Maximizing Profits

The process or strategy of adjusting the production and sale of goods and services to achieve the highest possible profit.

Fixed Costs

Costs that do not change with the level of output produced, such as rent, salaries, or insurance expenses.

Maximizing Profits

The process of increasing the difference between revenue and costs to achieve the highest possible financial gain.

Economic Profit

The surplus remaining after total costs are subtracted from total revenue, considering both explicit and implicit costs.