Ophelia O\'Brien, VP of Consumer Credit of American First Banks (AFB), monitors
ID: 3364309 • Letter: O
Question
Ophelia O'Brien, VP of Consumer Credit of American First Banks (AFB), monitors the default rate on personal loans at the AFB member banks. One of her standards is "no more than 5% of personal loans should be in default." On each Friday, the default rate is calculated for a sample of 500 personal loans. Last Friday's sample contained 38 defaulted loans. If the critical value for z is --1.282 and the observed value is --1.74, the appropriate decision is to _______.
reduce the sample size
increase the sample size
reject the null hypothesis
fail to reject the null hypothesis
do nothing
A researcher is testing a hypothesis of a single mean. The critical z value for = .05 and a two tailed test is ±1.96. The observed z value from sample data is --1.85. The decision made by the researcher based on this information is to _____ the null hypothesis.
reject
fail to reject
redefine
change the alternate hypothesis into
restate
The customer help center in your company receives calls from customers who need help with some of the customized software solutions your company provides. Your company claims that the average waiting time is seven minutes at the busiest times, 8 a.m. to 10 a.m., Monday through Thursday. One of your main clients has recently complained that every time she calls during the busy hours, the waiting time exceeds seven minutes. You conduct a statistical study to determine the average waiting time with a sample of 35 calls for which you obtain an average waiting time of 8.15 minutes. If the value of your test statistic is less than the critical value, the correct decision is to _____.
increase the sample size
reduce the sample size
fail to reject the seven-minute average waiting time claim
maintain status quo
reject the seven-minute claim
Explanation / Answer
Answer - 1: Since the test statistic is less than critical value for a left tailed test, we reject the null hypothesis.
Option C is correct.
Answer - 2: Since the test statistic falls within critical values, do not reject the null hypothesis.
Option B is correct.
Answer - 3: fail to reject the seven-minute average waiting time claim
Option C is correct.
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