A Manufacturer Claims That Less Than 1% of All His

question 136

Multiple Choice

A manufacturer claims that less than 1% of all his products do not meet the minimum government standards. A survey of 500 products revealed ten did not meet the standard. If the z-statistic is -2.58 and the level of significance is 0.02, what is your decision?

• A) You reject the null hypothesis, and agree that less than 1% fail to meet government standards.
• B) You have insufficient evidence to reject the null hypothesis.
• C) You reject the alternate hypothesis and agree that less than 1% meet government standards.
• D) You should have used the t-test.

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Definitions:

Efficient

The condition in which resources are allocated in a way that maximizes the net benefit to society or achieves an optimal outcome where no one can be made better off without making someone else worse off.

Beneficiaries

Individuals or groups that receive benefits or advantages from something, especially from a trust, insurance policy, or will.

Socially Optimal

A situation in which resources are allocated in the most efficient way from the society's point of view, maximizing total welfare.

Pollution

The contamination of the natural environment by harmful substances or energies, which can affect air, water, and land negatively and pose risks to human health and ecosystems.