You Are Trying to Estimate the Annual Cost of Setting

question 17

Multiple Choice

You are trying to estimate the annual cost of setting up a branch of a manufacturing business in Vancouver, based on your experience of running a similar business in Halifax. The original business produces 800 units per year, whereas the Vancouver branch will produce 1 700. If the cost of setting up the Halifax operation was $9 000 000 and the capacity factor is 0.6, give an order of magnitude estimate for the cost of setting up the Vancouver operation.

• A)$5 400 000
• B)$11 475 000$
• C)$14 147 000
• D)$19 125 000
• E)$20 250 000

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Definitions:

Confidence Level

The probability, expressed as a percentage, that a parameter lies within a specified range of values, indicating the reliability of an estimate.

Confidence Interval

A span of numbers that holds a certain likelihood of containing the actual value of the parameter.

Confidence Level

Confidence level indicates the probability that a population parameter will fall between two set values for a certain proportion of times.

Confidence Interval

An array of values, derived from observations of a sample, which is believed to enclose the value of a mystery parameter in the population.