Suppose an Automobile Manufacturer Designed a Radically New Lightweight Engine

question 127

Multiple Choice

Suppose an automobile manufacturer designed a radically new lightweight engine and wants to recommend the grade of gasoline that will have the best fuel economy. The four grades are regular, economy, premium, and super premium. The test car made three trial runs on the test track using each of the four grades. The miles per gallon were recorded for each grade. At the 0.05 level, what is the critical value of F used to test the hypothesis that the miles per gallon for each fuel are the same?

• A) 1.96
• B) 4.07
• C) 2.33
• D) 12.00

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Definitions:

Marginal Cost

The expenditure required to produce one more unit of a particular product or service.

Monopolistically Competitive

A market structure characterized by many firms, differentiated products, and free entry and exit, allowing firms some control over price while still competing on quality, branding, and price.

Externality

A cost or benefit that affects a third party who did not choose to incur that cost or benefit.

Efficient Scale

The level of production at which a firm's average total costs are minimized.