Suppose Bank of America Would Like to Investigate If the Credit

question 109

Multiple Choice

Suppose Bank of America would like to investigate if the credit score and income level of an individual are independent of one another.Bank of America selected a random sample of 400 adults and asked them to report their credit score range and their income range.The following contingency table presents these results. Based on the critical value approach and using α = 0.01,which of the following the decision and conclusion for this hypothesis test would be?

• A) The test statistic is greater than the critical value;we reject the null hypothesis and cannot conclude that credit score and income are independent of one another.
• B) The test statistic is greater than the critical value;we cannot reject the null hypothesis and can conclude that credit score and income are independent of one another.
• C) The test statistic is less than the critical value;we cannot reject the null hypothesis and cannot conclude that credit score and income are not independent of one another.
• D) The test statistic is less than the critical value;we reject the null hypothesis and cannot conclude that credit score and income are independent of one another.

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Definitions:

Variable Costs

Costs that change in proportion to the activity or volume of business, such as materials and labor.

Total Costs

The complete cost of production of goods or services, which includes both fixed and variable costs.

Revenues

The total income generated by a company from its business activities, typically from the sale of goods and services before any expenses are deducted.

Total Variable Cost

The total variable cost is the sum of all variable expenses that change in proportion to the volume of output or production.