A Supermarket Chain Has Its Own House Brand of Ice

question 26

Essay

A supermarket chain has its own house brand of ice cream. The general manager claims that her ice cream is better than the ice cream sold by a well-known ice cream parlour chain. To test the claim, 40 individuals are randomly selected to participate in the following experiment. Each respondent is given the two brands of ice cream to taste (without any identification) and asked to judge which one is better. Suppose that 25 people judge the ice cream parlour brand better, four say that the brands taste the same, and the rest claim that the supermarket brand is better.
Can we conclude at the 1% significance level that the general managers' claim is false?

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Definitions:

Negative Externalities

Costs suffered by a third party as a result of an economic transaction they were not involved in, such as pollution.

Unethical And Illegal Behavior

Actions that are morally wrong and prohibited by law, ranging from fraud and corruption to violations of human rights.

Paradox Of Voting

The situation where the individual incentive to vote (given the small chance of influencing the outcome) contrasts with the collective benefit of everyone voting.

Rent-Seeking Behavior

Rent-seeking behavior occurs when individuals or firms seek to increase their own wealth without contributing to productivity, often through political manipulation or monopolistic practices.