Exhibit 10-9 Two Major Automobile Manufacturers Have Produced Compact Cars with the with the Same

question 119

Multiple Choice

Exhibit 10-9
Two major automobile manufacturers have produced compact cars with the same size engines. We are interested in determining whether or not there is a significant difference in the MPG (miles per gallon) of the two brands of automobiles. A random sample of eight cars from each manufacturer is selected, and eight drivers are selected to drive each automobile for a specified distance. The following data show the results of the test.
-Refer to Exhibit 10-9. At 90% confidence the null hypothesis

• A)should not be rejected
• B)should be rejected
• C)should be revised
• D)None of these alternatives is correct.

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Definitions:

Profit-maximizing Level

The point at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.

Average Variable Cost

The total variable costs (costs that change with the level of output) of a firm divided by the quantity of output produced.

Total Variable Costs

The sum of all costs that vary with the level of output, including costs for raw materials, labor, and other expenses that change with production volume.

Purely Competitive

A purely competitive market is characterized by many buyers and sellers, homogeneous products, and no barriers to entry or exit, leading to price taking behavior by firms.