A Researcher Would Like to Determine If a Higher Proportion

question 27

Essay

A researcher would like to determine if a higher proportion of students than faculty support caps on textbook prices. The researcher gathers a random sample of 500 students and 500 faculty members and asks whether or not they support textbook price caps. Of the 500 students, 378 say they support capping textbook prices and of the 500 faculty members 256 say they support capping prices.
a.What are the hypotheses the researcher should use?
b.Are the assumptions met for a large sample test?
c.What is the P-value for the hypothesis test?
d.What conclusion can be drawn?

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Definitions:

Hedge

An investment made to reduce the risk of adverse price movements in an asset, often involving derivatives like options and futures.

Basis Risk

Risk attributable to uncertain movements in the spread between a futures price and a spot price.

Short Hedger

An investor who enters into futures contracts to protect against potential price declines in an asset they hold.

Futures Price

The agreed-upon price for the sale/purchase of an asset at a future date, as determined in a futures contract.