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:

Mediocre Economists

Economists who may possess average skills or lack the influence of leading thinkers in their field.

Observable

A characteristic or phenomenon that can be seen, measured, or otherwise detected through empirical methods.

Self-interest

The pursuit of individual advantage or profit, often regarded as a basic economic driving force.

Adam Smith

An 18th-century Scottish economist and philosopher, often considered the father of modern economics, best known for his theory of the invisible hand guiding free markets.