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

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Definitions:

Optimal Level

The most efficient, effective, or desirable point or state for a specific objective or condition.

Shift

Movement of a supply or demand curve on a graph, indicating a change in equilibrium quantity and/or price in the market.

Subsidy

Financial support extended by the government to a sector, industry, or individual, intended to promote economic and social policy objectives.

Negative Externality

A cost imposed without compensation on third parties by the production or consumption of sellers or buyers. Example: A manufacturer dumps toxic chemicals into a river, killing fish prized by sports fishers. Also known as an external cost or a spillover cost.