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The Safety Commissioner for the State of North Dakota Is

question 18

Essay

The Safety Commissioner for the state of North Dakota is contemplating requiring anyone who applies for a hunting license to take a gun safety class. The state's insurance commissioner has determined that taking this course will reduce the likelihood of a self-inflicted mortality by 1/1,000,000. Recent work by an economist at the University of North Dakota indicates that hunters in North Dakota value their lives at $5,000,000. Since the Safety Commissioner is up for re-election soon, he wants to make sure the cost to hunters of the program is not too high. What price should he charge hunters for this safety class? Why might N.D. offer the course for less than the expected benefit to hunters? Explain.


Definitions:

Alpha

A threshold value used in hypothesis testing that represents the level of significance, typically set at 0.05 or 0.01, indicating the probability of wrongly rejecting the null hypothesis.

Chi-square Statistic

A statistical measure used to determine if there is a significant relationship between two categorical variables.

Degrees of Freedom

The number of independent values or quantities that can vary in the calculation of a statistic.

Critical Value

A threshold in hypothesis testing that defines the boundary between the region where the null hypothesis is rejected and where it is not.

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