Suppose That a Manufacturer Is Testing One of Its Machines

question 34

Multiple Choice

Suppose that a manufacturer is testing one of its machines to make sure that the machine is producing more than 97% good parts (H0: p = 0.97 and HA: p > 0.97) . The test results in a P-value of 0.102. In reality, the machine is producing 99% good parts. What probably happens as a result of our testing?

• A) We correctly fail to reject H0.
• B) We correctly reject H0.
• C) We reject H0, making a Type I error.
• D) We fail to reject H0, making a Type I error.
• E) We fail to reject H0, making a Type II error.

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Definitions:

Internal Decision Makers

Entities or individuals within an organization responsible for making choices that affect the company's operations and strategy.

Managerial Accounting

The method of pinpointing, quantifying, examining, elucidating, and relaying financial data to managers to help achieve the objectives of an organization.

External Auditors

Independent experts who review the financial statements of a company to ensure accuracy and compliance with accounting standards.

Estimates

Approximations or educated guesses used in accounting to quantify amounts when precise measurements are unavailable or impractical.