Table 11-2 Consider a Small Town with Only Three Families, the Greene

question 262

Multiple Choice

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.
-Refer to Table 11-2. Suppose the cost to install each streetlight is $600 and the families have agreed to split the cost of installing the streetlights equally. To maximize their own surplus, how many streetlights would the Brown's like the town to install?

• A)0 streetlights
• B)1 streetlight
• C)2 streetlights
• D)3 streetlights

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Definitions:

Type I Error

A statistical error that occurs when a true null hypothesis is incorrectly rejected.

Type II Error

A statistical error that occurs when a false null hypothesis is not rejected. It represents a miss or a failure to detect an effect or difference that actually exists.

Confidence Coefficient

The degree of certainty or probability that a specified parametric interval will contain the true value of an unknown population parameter.

Power of the Test

The probability that the test will correctly reject a false null hypothesis, essentially reflecting the sensitivity of the test.