A Magician Has a Coin That May or May Not

question 67

Multiple Choice

A magician has a coin that may or may not be fair. The results of 30 flips of the coin are H H T H T H H T H H T H H T H T H H H T T T T T H H H H H T. To determine if the coin is fair using the Wald-Wolfowitz runs test, the competing hypotheses are ________.

• A) H₀: Heads and tails do not occur randomly; H_A: Heads and tails occur randomly
• B) H₀: Heads and tails occur randomly; H_A: Heads and tails do not occur randomly
• C) H₀: Heads and tails occur randomly; H_A: Heads are more likely
• D) H₀: Heads and tails occur randomly; H_A: Tails are more likely

---

Definitions:

Mental Accounting

The tendency of individuals to categorize and treat money differently based on subjective criteria, affecting financial decisions.

Consumption Options

The variety of goods and services that consumers have the ability to purchase and use.

Isolate Purchases

involves separating specific buying transactions for closer analysis or for special treatment in accounting or analysis.

Mental Accounting

A concept within behavioral economics that refers to the way individuals categorize, separate, and evaluate financial activities, often leading to irrational decision-making.