Regarding Control Charts, Changing from Three-Sigma Limits to Two-Sigma Limits

question 156

Multiple Choice

Regarding control charts, changing from three-sigma limits to two-sigma limits:

• A) increases the probability of concluding nothing has changed, when in fact it has.
• B) increases the probability of searching for an assignable cause when none exists.
• C) decreases the probability that the process average will change.
• D) decreases the probability that defects will be generated by the process.

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Definitions:

Income Effect

A change in the consumption patterns of individuals or economies due to a change in real income or purchasing power.

Labor-Supply Curve

A graphical representation showing the relationship between the quantity of labor supplied by workers and the wage rate.

Income Effect

How an alteration in income levels for a person or economy affects the demand for a particular good or service.

Substitution Effect

The change in quantity demanded of a good that results from a change in price, making the good more or less costly relative to other goods.