## A random sample of 93 observations produced a mean

1. A random sample of 93 observations produced a mean x=25.5 and a standard deviation sequals=2.4.

a. Find a​ 95% confidence interval for μ.

b. Find a​ 90% confidence interval for μ.

c. Find a​ 99% confidence interval for μ.

2. The mean and standard deviation of a random sample of n measurements are equal to 34.4 and 3.6​, respectively.

a. Find a 90​% confidence interval for μ if n=121.

b. Find a 90​% confidence interval for μ if n=484.

c. Find the widths of the confidence intervals found in parts a and b. What is the effect on the width of a confidence interval of quadrupling the sample size while holding the confidence coefficient​ fixed?

3. If you wish to estimate a population mean with a margin of error ME=0.23 using a​ 95% confidence interval and you know from prior sampling that σ2 is approximately equal to 7.3​, how many observations would have to be included in your​ sample?

The number of observations that would have to be included in your sample is

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## A survey conducted at a mid western university and involving 1,500

A survey conducted at a mid western university and involving 1,500 students found that 68% had taken out a student loan to help pay for the cost of their college education. A similar study at a southeastern university in which 2,000 students were surveyed found that 47​% had taken out a student loan.

a. Develop and interpret a 95% confidence interval estimate for the difference in the proportions of students who have loans at these two universities.

b. Using an alpha level of 0.05, test the hypothesis that there is no difference in the proportions of students at these two universities who have loans. How does this test compare with the result you found in part​ a?

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## Pearson Architectural Design uses a job-order costing system and applies

Pearson Architectural Design uses a job-order costing system and applies studio overhead to jobs on the basis of direct staff costs. Because Pearson Architectural Design is a service firm, the names of the accounts it uses are different from the names used in manufacturing companies. The following costs were recorded in January:

Cost of subcontracted work (comparable to direct materials)\$90,000 Direct staff costs (comparable to direct labor)\$200,000 Studio overhead (comparable to manufacturing overhead cost applied)\$320,000 Cost of work completed (comparable to cost of goods manufactured)\$570,000

There were no beginning inventories in January.

At the end of January, only one job was still in process. This job (the Krimmer Corporation Headquarters project) had been charged with \$13,500 in direct staff costs.

Required:

1. Compute the predetermined overhead rate that was used during January.

2. Complete the following job cost sheet for the partially completed Krimmer Corporation Headquarters project. (Hint: Cost of goods manufactured equals beginning work in process inventory plus manufacturing costs incurred less ending work in process inventory.)

Here’s the SOLUTION

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## A major difference between a monopolist and a perfectly

1. A major difference between a monopolist and a perfectly competitive firm is that

a. the monopolist is certain to earn economic profits.

b. the monopolist’s marginal revenue curve lies below its demand curve.

c. the monopolist engages in marginal cost pricing.

d. the monopolist charges the highest possible price that he can.

2. A monopolist is producing at an output level at which ATC = \$5, P = \$6, MC = \$4, and MR = \$3. We can conclude that

a. economic profit could be increased by producing less.

b. the firm is earning \$10 in economic profits.

c. economic profit could be increased by producing more.

d. economic profit cannot be increased.

3. A natural monopoly

a. involves multiple firms selling differentiated products.

b. is derived from deposits of natural resources.

c. usually arises when there are large economies of scale.

d. requires government licensing initially.

4. If a monopolist produces to a point at which marginal revenue is greater than marginal cost then

profits will always be negative.
the incremental cost of producing the last unit is less than the incremental revenue.
profits are being maximized.
the incremental cost of producing the last unit exceeds the incremental revenue.

5. If the above figure accurately portrays the market conditions for a given monopolist, we can be assured that the monopolist

a. is making a normal profit.

b. will be forced to go out of business in the long run.

c. is making excessive profits.

d. is producing at the level that will maximize benefit to society.

6. The MR curve of a monopolist is

downsloping and above the demand curve.
downward sloping and below the demand curve.
horizontal and same as the market demand curve.
downsloping and identical to the demand curve.

7. Which of the following is a characteristic of a monopoly market?

a. Firm is a price taker.

b. easy entry

c. one firm

d. many firms

8. In a perfectly competitive market, the average revenue curve of a firm is

a. the same as its demand curve.

b. the same as its total revenue curve.

c. the difference between its total revenue curve and its marginal revenue curve.

d. the same its economic profits.

9. The profit-maximizing output for the perfectly competitive firm occurs at the point at which

TR – ATC is at a maximum.
MR = MC.
TR – MR is at a maximum.
TR – TC is at a minimum.

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## The Stern Report seeks to discount \$6 trillion of annual benefits occurring

Question 1

The Stern Report seeks to discount \$6 trillion of annual benefits occurring 100 years from now. If these are discounted at a rate of 4 percent, the present discounted value of the benefits will be approximately:

\$828.2 billion.

\$455.7 billion.

\$118.8 billion.

\$81.6 billion.

Question 2

In Nyman’s insurance formulation:

some portion of the income transfer is welfare increasing, but there can also be moral hazard which is welfare decreasing.

there is no income transfer.

none of the insurance transfer is welfare increasing.

all of the insurance transfer is welfare increasing.

Question 3

Compared to men, women have __________ health expenditures earlier in their lives and __________ health expenditures later in their lives.

lower; lower

higher; lower

lower; higher

higher; higher

Question 4

Women who have had Cesarean births may be denied coverage due to “pre-existing conditions.” Insurers who deny this coverage are trying to:

prevent the moral hazard from higher cost clients.

prevent adverse selection of higher cost clients.

satisfy the preferences of those consumers who buy their insurance.

increase profits by enlarging the pool of potential buyers.

Question 5

According to economic definitions, __________ has (have) most of the characteristics of public goods.

public schools

city-run golf courses

county-run hospitals

Question 6

In the first decade of the twenty-first century, the nursing home population has:

grown at about 4 percent per year.

doubled.

dropped slightly.

fallen in half.

Question 7

Equity refers to the __________ of the allocation of goods and services:

costs

fairness

efficiency

benefits

Question 8

Resource based relative value scales (RBRVS):

include no provider liability insurance component.

include constant provider liability insurance for all specialties.

vary the provider liability insurance depending on the particular service.

provide total protection against all malpractice claims.

Question 9

Suppose a worker earns \$14 per hour plus health benefits worth \$2 per hour. If the employer withdraws the benefits and offers the worker \$17 per hour the worker will be:

better off because \$17 is more than the \$16 he or she was earning in wages plus benefits.

as well off because he or she is earning more than before.

worse off because previously he or she was not getting the benefits.

worse off because previously he or she was getting the benefits.

Question 10

If, as a result of a plague, the equilibrium wage level has risen, one can conclude that:

the plague has imposed no costs on society.

supply of labor has decreased more than demand for labor.

demand for labor has increased more than supply of labor.

supply of labor has increased more than the demand of labor.

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## The success of a federally funded, locally administered manpower program

The success of a federally funded, locally administered manpower program was measured by the proportion of clients who moved from subsidized employment into unsubsidized (private sector) employment and remained there for a certain length of time. A random sample of n = 376 clients of the program produced the following results .
The success of a federally funded, locally administered manpower program was measured by the proportion of clients who moved from subsidized employment into unsubsidized (private sector) employment and remained there for a certain length of time. A random sample of n = 376 clients of the program produced the following results .

Education Success Failure

8 years or less 13 19

9 to 11 years 76 45

12 years 107 65

13 years or more 32 19

i. Estimate the marginal probabilities of success and failure.

ii. Test the hypothesis that the program outcomes are independent of educational level using a χ 2 test of independence.

Education Success Failure

8 years or less 13 19

9 to 11 years 76 45

12 years 107 65

13 years or more 32 19

i. Estimate the marginal probabilities of success and failure.

ii. Test the hypothesis that the program outcomes are independent of educational level using a χ 2 test of independence.

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## According to the Center for Disease Control website, in 2011

According to the Center for Disease Control website, in 2011 not less than 18% of high school students have smoked a cigarette. An Introduction to Statistics class in Davies County, KY conducted a hypothesis test at the local high school (a medium sized-approximately 1,200 students-small city demographic) to determine if the local high school’s percentage was lower. One hundred fifty students were chosen at random and surveyed. Of the 150 students surveyed, 82 have smoked. Use a significance level of 0.07 and using appropriate statistical evidence, conduct a hypothesis test and state the conclusions.

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## Jim D’Addario of the well-known guitar and bass string factory D’Addario

Jim D’Addario of the well-known guitar and bass string factory D’Addario Strings in Long Island, NY, is considering two new designs for more efficient and higher quality machines (the company has won many manufacturing and product patents in the field).

Assume machine A costs \$750,000 to make and is expected to return the following net earnings over five years, after which time it is retired: \$10 million, \$9 million, \$8 million, \$7 million, and \$6 million, respectively.

Assume machine B costs \$850,000 to make and is expected to return the following net earnings over five years, after which time it is also retired: \$10.1 million, \$9.1 million, \$8.1 million, \$7.1 million, and \$6.1 million, respectively.

All other things being equal, which design should Jim go with if he is using a discount rate of 7%?

Hint: Use NPV analysis.

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## The trial balance of CX Trading as at 31 December 20×5 showed

The trial balance of CX Trading as at 31 December 20×5 showed a difference which was posted to a suspense account. Drafted financial statements for the year ended 31 December 20×5 were prepared showing a net profit of \$23,120. The following errors were subsequently found:

1. The purchase of a new van for \$6,000 was included in the motor van expense account.

2. The debit side of the stationary account is undercast by \$250.

3. There is a debit in the rent account of \$400 but should be \$4,000.

4. The rates on the owner’s home of \$750 has been paid by the business and debited to the business’ rates account.

5. \$720 included in the wages account of the business was in fact paid to the house keeper of the owner.

6. Purchases of inventory costing \$500 paid by cheque had been totally missed out in the books.

7. Insurance paid by cheque of \$150 was credited to both accounts.

Required:

a) The journal entries to correct the errors of the above. Narratives not required.

b) A statement of correcting the profit as found in the drafted financial statements.

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## On January 1, 2016, Alpha Company purchased equipment for \$16,000

On January 1, 2016, Alpha Company purchased equipment for \$16,000 with an estimated 10-year life and no salvage value. It was determined that the straight-line method of depreciation would be used. Alpha has a December 31 fiscal year end. During 2020, Alpha determined that the useful life for this equipment should be only 7 years. Using this information, how much is: (Enter only whole dollar values.)

the 2020 depreciation expense
the accumulate depreciation after the fiscal year 2020 adjusting entry
the book value of the truck after the fiscal year 2020 adjusting entry

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