SCENARIO 12-21 A Perfume Manufacturer Is Trying to Choose Between 2 Magazine

question 214

Multiple Choice

SCENARIO 12-21
A perfume manufacturer is trying to choose between 2 magazine advertising layouts.An expensive layout would include a small package of the perfume.A cheaper layout would include a "scratch- and-sniff" sample of the product.The manufacturer would use the more expensive layout only if there is evidence that it would lead to a higher approval rate.The manufacturer presents both layouts to 5 groups and determines the approval rating from each group on both layouts.The data are given below.Use this to test whether the median difference in approval rating is different from zero in favor of the more expensive layout with a level of significance of 0.05.

-Referring to Scenario 12-21,the perfume manufacturer will

• A)use the "scratch-and-sniff" layout because there is insufficient evidence to do otherwise.
• B)use the package layout because there is insufficient evidence to do otherwise.
• C)use the "scratch-and-sniff" layout because there is sufficient evidence to conclude that this is the best course of action.
• D)use the package layout because there is sufficient evidence to conclude that this is the best course of action.

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Definitions:

Interest Rate

The price paid for borrowing money, typically expressed as a percentage rate over a period of time.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return.

Pure Market Capitalism

An economic system where all productive resources are owned and controlled by private individuals and businesses, with all economic decisions made through the market.

Government Interference

Actions by government agencies that affect the market or economy through regulations, policies, or direct involvement.