A Report from the U

question 20

Multiple Choice

A report from the U.S. Department of Health and Human Services estimated that 10.2 percent of Americans in 2014 had used illicit drugs with a margin of error of ± 0.18 percent. Suppose that many of those asked about their behavior give an answer that isn't the truth because they fear that their answer will go to law enforcement officials.

• A) This is a sampling error that causes bias.
• B) This is a sampling error that increases variability.
• C) This is a nonsampling error that causes bias.
• D) This is a nonsampling error that increases variability.

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Definitions:

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project, by calculating the difference between the present value of cash inflows and outflows.

Forecasting Risk

The potential for a significant difference between forecasted and actual results due to assumptions or model inaccuracies.

Projected Fixed Costs

Estimated costs that do not vary with the volume of output or sales, typically including expenses like rent, salaries, and insurance.

Contribution Margin

The difference between sales revenue and variable costs, illustrating how much revenue contributes towards covering fixed costs and generating profit.