TABLE 10-8
a Buyer for a Manufacturing Plant Suspects That

question 78

True/False

TABLE 10-8
A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. In order to determine if his suspicion is correct, he contacts a second supplier and asks for the prices on various identical materials. He wants to compare these prices with those of his primary supplier. The data collected is presented in the table below, with some summary statistics presented (all of these might not be necessary to answer the questions which follow). The buyer believes that the differences are normally distributed and will use this sample to perform an appropriate test at a level of significance of 0.01.
$\begin{array}{crrr}&\text { Primary}&\text { Secondary }\\\underline{\text {Material }}&\underline{\text {Supplier}}&\underline{\text { Supplier }}&\underline{\text {Difference }}\\1 & \$ 55 & \$ 45 & \$ 10 \\2 & \$ 48 & \$ 47 & \$ 1 \\3 & \$ 31 & \$ 32 & -\$ 1 \\4 & \$ 83 & \$ 77 & \$ 6 \\5 & \$ 37 & \$ 37 & \$ 0 \\6 & \$ 55 & \$ 54 & \$ 1 \\\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17\\\text { Sum of Squares: } &\$ 17,573& \$ 15,472 &\$ 139\end{array}$







-Referring to Table 10-8, the null hypothesis should be rejected.

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Definitions:

Services

Services like accounting, banking, cleaning, consulting, education, insurance, professional knowledge, medical care, and transportation that cannot be physically touched.

Goodwill

An intangible asset on a company's balance sheet that represents the premium paid over the fair market value of the acquired assets in a business acquisition.

Tangible Capital

Physical assets that are used in the operating activities of a business, such as buildings, machinery, and equipment.

Economic System

The organized way a country allocates resources and distributes goods and services in the national community.