Ophelia O'Brien,VP of Consumer Credit of American First Banks (AFB),monitors $\alpha$

question 18

Multiple Choice

Ophelia O'Brien,VP of Consumer Credit of American First Banks (AFB) ,monitors the default rate on personal loans at the AFB member banks. One of her standards is "no more than 5% of personal loans should be in default." On each Friday,the default rate is calculated for a sample of 500 personal loans. Last Friday's sample contained 38 defaulted loans. Using $\alpha$ = 0.10,the appropriate decision is _______.

• A) reduce the sample size
• B) increase the sample size
• C) reject the null hypothesis
• D) fail to reject the null hypothesis
• E) do nothing

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Definitions:

Marginal Cost

The additional financial burden of producing one more unit of a product or service.

Break-even Price

The price level at which a business does not make a profit or a loss.

Long Run

In economics, the period in which all inputs can be adjusted, with no fixed costs, allowing for full adjustment to changes in the market.

Industry Supply Curve

A graphical representation showing the total quantity of a good that producers in an industry are willing to supply at various prices.