A Taste Test of Randomly Selected Students Was Conducted to See

question 19

Multiple Choice

A taste test of randomly selected students was conducted to see if there was a difference in preferences among four popular drinks.The following table shows the frequency of responses: Using α = .025,what can you conclude from your analysis?

• A) Reject the null and conclude some drinks are preferred more than others.
• B) There is not enough evidence to say that a preference exists.
• C) Pepsi is the preferred drink.
• D) Form no conclusion because Cochran's Rule is violated.

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to substitute away from more expensive goods towards cheaper ones.

Income Effect

The impact on consumer's choice arising from a change in their income, influencing their purchasing power.

Giffen Good

A type of inferior good for which demand increases as the price increases, violating the basic law of demand.

Inferior Good

A type of good whose demand decreases when consumer income rises, and vice versa, often contrasted with normal goods whose demand increases with rising income.