Instruction 9-4 A Drug Company Is Considering Marketing a New Local Anaesthetic

question 55

True/False

Instruction 9-4
A drug company is considering marketing a new local anaesthetic. The effective time of the anaesthetic the drug company is currently producing has a normal distribution with a mean of 7.4 minutes with a standard deviation of 1.2 minutes. The chemistry of the new anaesthetic is such that the effective time should be normal with the same standard deviation, but the mean effective time may be lower. If it is lower, the drug company will market the new anaesthetic; otherwise, it will continue to produce the older drug. A sample of size 36 results in a sample mean of 7.1. A hypothesis test will be done to help make the decision.
-Referring to Instruction 9-4,the null hypothesis will be rejected with a level of significance of 0.10.

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Definitions:

Standard Quantity

The predetermined amount of materials or inputs that should be used in the production of goods or services under normal operating conditions.

Standard Price

A predetermined cost assigned to goods and services, used for budgeting, cost control, and performance evaluation purposes.

Materials Price Variance

The difference between the actual cost of materials and the standard cost multiplied by the actual quantity used.

Standard Price

The anticipated or predetermined cost of a product, often used as a reference for evaluating actual costs.