Instruction 10-5
a Buyer for a Manufacturing Plant Suspects That

question 8

Multiple Choice

Instruction 10-5
A buyer for a manufacturing plant suspects that his primary supplier of raw materials is overcharging. In order to determine if his suspicion is correct, he contacts a second supplier and asks for the prices on similar various materials. He wants to compare these prices with those of his primary supplier. The data collected is presented in the table below, with some summary statistics presented (all of these might not be necessary to answer the questions which follow) . The buyer believes that the differences are normally distributed and will use this sample to perform an appropriate test at a level of significance of 0.01.
$\begin{array}{llll}\text {Material}&\text {Primary Supplier}&\text {Secondary}&\text {Difference}\\&&\text { Supplier }\\ 1 & \$ 55 & \$ 45 & \$ 10 \\2 & \$ 48 & \$ 47 & \$ 1 \\3 & \$ 31 & \$ 32 & -\$ 1 \\4 & \$ 83 & \$ 77 & \$ 6 \\5 & \$ 37 & \$ 37 & \$ 0 \\6 & \$ 55 & \$ 54 & \$ 1 \\\hline \text { Sum: } & \$ 309 & \$ 292 & \$ 17 \\\text { Sum of Squares: } & \$ 17,573 & \$ 15,472 & \$ 139\end{array}$

-Referring to Instruction 10-5,the test to perform is a

• A) paired t test for the mean difference.
• B) Z test for the difference between two means.
• C) separate-variance t test for differences between two means.
• D) pooled-variance t test for differences between two means.

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Definitions:

Equality

The state or condition of being equal, especially concerning status, rights, and opportunities.

Ticket-Scalping

The act of buying tickets for an event and reselling them at a higher price.

Costs to Society

The total burden that societal behaviors, decisions, or policies place on the welfare of the community, including both direct costs and indirect consequences.

Total Surplus

The sum of consumer surplus and producer surplus; a measure of the overall benefit to society from the production and consumption of goods or services.