You Want to Determine If the Average Gas Price in Your

question 24

Multiple Choice

You want to determine if the average gas price in your city has exceeded $1.30 per litre for regular unleaded gasoline.You take a random sample of prices from 8 gas stations ,recording the following prices: $1.33,$1.30,$1.05,$1.29,$1.37,$1.32,$1.30,$1.31.Have the conditions and assumptions for inference been met?

• A)No,the nearly normal condition is not met.
• B)No,the sample is not random.
• C)No,the sample is not representative.
• D)Yes,all conditions and assumptions have been met.
• E)No,the sample is more than 10% of the population.

Comprehend the internal rate of return (IRR) and its implications for investment decisions.

Recognize the limitations and potential pitfalls of using the IRR and PI for mutually exclusive investments.

Understand the concept of the crossover rate and its relevance in comparing mutually exclusive projects.

Learn about the arbitrary cutoff numbers used in accounting rate of return (AAR) and payback methods.

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, quantified as the percentage change in quantity demanded divided by the percentage change in price.

Demand

The amount of a product or service that buyers are ready and capable of buying at different price levels over a specific time frame.

Supply Curve

A graph showing the relationship between the price of a good and the quantity of that good that suppliers are willing to produce and sell.

Price Elasticity

A measure indicating the extent to which the demand for a merchandise changes following a price adjustment.