We Test the Hypothesis That P = 35% Versus P

question 8

Multiple Choice

We test the hypothesis that p = 35% versus p < 35%. We don't know it but actually p = 26%. With which sample size and significance level will our test have the greatest power?

• A) a = 0.03, n = 250
• B) a = 0.01, n = 250
• C) The power will be the same as long as the true proportion p remains 26%
• D) a = 0.01, n = 400
• E) a = 0.03, n = 400

---

Definitions:

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services.

Typical Consumer

A typical consumer represents an average or standard unit of analysis in economic models, used to predict behavior patterns in the marketplace.

Bureau of Labor Statistics

The U.S. government's entity charged with the acquisition and study of statistics regarding employment market dynamics, workplace environments, and price alterations.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to estimate the cost of living.