A Decision Maker Wishes to Test the Following Null and Alternative

question 46

Multiple Choice

A decision maker wishes to test the following null and alternative hypotheses using an alpha level equal to 0.05: H0 : μ1 - μ2 = 0 HA : μ1 - μ2 ≠ 0 The population standard deviations are assumed to be known. After collecting the sample data, the test statistic is computed to be z = 1.78 Using the test statistic approach, what conclusion should be reached about the null hypothesis?

• A) Because z = 2.40 > 1.96, we reject the null hypothesis.
• B) Because z = 2.03 > 1.96, we reject the null hypothesis.
• C) Because z = 1.78 < 1.96, we do not reject the null hypothesis.
• D) Because z = 1.45 < 1.645, we do not reject the null hypothesis.

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Definitions:

Contribution Margin Ratio

The proportion of sales revenue that remains after variable costs are subtracted, expressed as a percentage, indicating the contribution towards covering fixed costs and generating profit.

Fixed Expenses

Costs that do not change in total despite changes in the level of business activity or production volume, such as rent or salaries.

Target Net Profit

A financial objective set by a business indicating the desired bottom-line income after all expenses, interest, and taxes have been deducted from total revenues.

Degree of Operating Leverage

A measure of how much a company's operating income changes in response to a change in sales volume, indicating the level of fixed versus variable costs.