Table 11-2 Consider a Small Town with Only Three Families, the Greene

question 403

Multiple Choice

Table 11-2
Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.
-Refer to Table 11-2. Suppose the cost to install each streetlight is $900 and the families have agreed to split the cost of the streetlights equally. If the families vote to determine the number of streetlights to install, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus) , what is the greatest number of streetlights for which the majority of families would vote "yes?"

• A)1 streetlight
• B)2 streetlights
• C)3 streetlights
• D)4 streetlights

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Definitions:

P-value

A measure in statistics that helps to determine the significance of results derived from a hypothesis test.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true; a threshold for determining statistical significance, usually denoted by alpha (α).

Null Hypothesis

In statistics, a hypothesis that there is no significant difference or association between specified populations, any observed difference being due to sampling or experimental error.

Mean Weight

The average mass of an object or collection of objects, obtained by adding their weights together and dividing by the number of objects.