TABLE 9-9 The President of a University Claimed That the Entering Class

question 86

Multiple Choice

TABLE 9-9
The president of a university claimed that the entering class this year appeared to be larger than the entering class from previous years but their mean SAT score is lower than previous years. He took a sample of 20 of this year's entering students and found that their mean SAT score is 1,501 with a standard deviation of 53. The university's record indicates that the mean SAT score for entering students from previous years is 1,520. He wants to find out if his claim is supported by the evidence at a 5% level of significance.
-Referring to Table 9-9, which of the following best describes the Type I error?

• A) The president concludes that the mean SAT score of the entering students is lower than previous years when it is indeed not lower.
• B) The president concludes that the mean SAT score of the entering students is higher than previous years when it is indeed not higher.
• C) The president concludes that the mean SAT score of the entering students is not lower than previous years when it is indeed lower.
• D) The president concludes that the mean SAT score of the entering students is not higher than previous years when it is indeed higher.

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Definitions:

Degree Of Operating Leverage

A ratio that measures the sensitivity of a company's operating income to its sales volume, indicating how earnings are affected by sales changes.

Variable Expenses

Costs that change in proportion to the activity of a business, such as raw material costs, sales commissions, or delivery charges.

Fixed Expenses

Expenses that remain constant regardless of variations in the level of production or the volume of sales, like lease payments or wages.

Degree Of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, indicating the impact of fixed costs on earnings.