SCENARIO 9-2
a Student Claims That He Can Correctly Identify $\beta$

question 160

Multiple Choice

SCENARIO 9-2
A student claims that he can correctly identify whether a person is a business major or an agriculture
major by the way the person dresses. Suppose in actuality that if someone is a business major, he can
correctly identify that person as a business major 87% of the time. When a person is an agriculture
major, the student will incorrectly identify that person as a business major 16% of the time. Presented
with one person and asked to identify the major of this person (who is either a business or an
agriculture major) , he considers this to be a hypothesis test with the null hypothesis being that the
person is a business major and the alternative that the person is an agriculture major.
-Referring to Scenario 9-2, what is the value of $\beta$ ?

• A) 0.13
• B) 0.16
• C) 0.84
• D) 0.87

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Definitions:

Collude

To conspire or work together secretly, especially in order to cheat or deceive others.

Dutch Auction

A type of auction where the auctioneer starts with a high asking price which is lowered until some participant is willing to accept the auctioneer’s price, or a predetermined minimum price is reached.

Sealed-Bid Auction

A type of auction where all bidders simultaneously submit sealed bids without knowing the bids of other participants.

Reserve Price

The minimum price a seller is willing to accept for an item being sold at auction.