Scenario: Mike Wants to Buy an Ancient Painting from a Curator

question 62

Multiple Choice

Scenario: Mike wants to buy an ancient painting from a curator. Mike values the original painting at $50,000, while he does not have any value for a fake one. However, he cannot differentiate between the original painting and a fake painting.
-Refer to the scenario above.How much should he pay for the painting if he thinks that there is a 70 percent chance that the painting he is buying is original?

• A) $50,000
• B) $35,000
• C) $70,000
• D) $15,000

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Definitions:

Sample Statistic

A numerical measure that describes some characteristic of a sample of data.

Special Causes

Unusual or non-random factors that cause variation in a process, distinguished from common causes that are inherent to the process.

Quantitative Sample Statistic

A numerical measurement that describes an attribute of a sample of a population.

Statistical Quality Control

A method of using statistical methods to monitor and control a process to ensure that it operates at its full potential to produce conforming product.