A Large Restaurant Contracts with a Local Laundry to Wash

question 71

Multiple Choice

A large restaurant contracts with a local laundry to wash white napkins. The laundry returns the napkins in bundles of one-hundred napkins. The restaurant randomly samples ten napkins from each bundle to make sure that the napkins are clean with no stains or other defects. By sampling only ten of the napkins, the restaurant may conclude that the all the napkins are clean and use the bundle, even when the napkins are actually dirty and should not be used. This sampling risk is called:

• A) producer's risk.
• B) uncertainty.
• C) consumer's risk.
• D) inspection risk.

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Definitions:

Industrial Revolution

The period of major industrialization that took place during the late 1700s and early 1800s which transformed economies that had been based on agriculture and handicrafts into economies based on large-scale industry, mechanized manufacturing, and the factory system.

Productivity Growth

An increase in the efficiency of producing goods or services within an economy, often leading to more output for the same amount of inputs.

Raise Savings

Encouraging or implementing strategies to increase the amount of money that individuals or entities set aside for future use rather than spending immediately.

NIC

Newly Industrialized Country, referring to nations experiencing rapid economic growth and industrialization.