Making high-stakes insurance decisions. The Journal of Economic Psychology (September 2008) published the results of a high-stakes experiment in which subjects were asked how much they would pay for insuring a valuable painting. The painting was threatened by fire and theft, hence, the need for insurance. To make the risk realistic, the subjects were informed that if it rained on exactly 24 days in July, the painting was considered to be stolen; if it rained on exactly 23 days in August, the painting was considered to be destroyed by fire. Although the
- a. Find the probability that it will rain on exactly 24 days in July.
- b. Find the probability that it will rain on exactly 23 days in August.
- c. Are the probabilities, parts a and b, good approximations to the probabilities of “fire” and “theft”?
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Statistics for Business and Economics (13th Edition)
- Illustrate the two types of quasi-experiments by following examples? Example #1: Labor market effects of immigration. Example #2: Effects on civilian earnings of military service.arrow_forwardThe American Taxpayer Relief Act of 2012 was passed by the U.S. Congress on January 1, 2013. This act helped address what became famously known as the “fiscal cliff” crisis. However, during the last months of 2012, heated debates concerning the crisis were ongoing in Congress, and there was growing concern political gridlock was preventing a solution of the crisis by the end-of-year deadline. In mid-December, a USA Today– Gallup poll reported that only 18% of a sample of 1025 adult Americans approved of the job Congress was doing in working toward a solution to the looming fiscal cliff. Calculate a two-sided confidence interval using a 99% confidence level for the proportion of all U.S. adults who approved of the congressional handling of the crisis in December 2012.arrow_forwardIn a study of whether taking a garlic supplement reduces the risk of getting a cold, participants were assigned to either a garlic supplement group or to a group that did not take a garlic supplement.† Based on the study, it was concluded that the proportion of people taking a garlic supplement who get a cold is lower than the proportion of those not taking a garlic supplement who get a cold. Do you think that the study was conducted in a reasonable way? What additional information would you want in order to evaluate this study? (Select all that apply.) A) whether the patients knew which treatment they were receiving B) whether the patients were randomly assigned to the treatments C) whether the patient's last name started with A through M D) whether the patient's cold lasted more than a week E) whether the experiment was conducted on a sufficient number of patients so that the differences observed could not be attributed to chancearrow_forward
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- In an article in Accounting and Business Research, Beattie and Jones investigate the use and abuse of graphic presentations in the annual reports of United Kingdom firms. The authors found that 65 percent of the sampled companies graph at least one key financial variable, but that 30 percent of the graphics are materially distorted (nonzero vertical axis, exaggerated trend, or the like). Results for U.S. firms have been found to be similar. (a) Suppose that in a random sample of 451 graphics from the annual reports of United Kingdom firms, 146 of the graphics are found to be distorted. Find a point estimate of and a 95 percent confidence interval for the proportion of all U.K. annual report graphics that are distorted. (Round your answers to 4 decimal places.) (b) Based on this interval, can we be 95 percent confident that more than 25 percent of all graphics appearing in the annual reports of U.K. firms are distorted? Does this suggest that auditors should understand proper…arrow_forwardSony Electronics produces a wide variety of electronic products for the consumer marketplace, such as laptop computers, PlayStation game consoles, and tablet computers. What type of products would these be considered in the Supply Chain Uncertainty Framework?arrow_forwardA market-research group specializes in providing assessments of the prospects of sites for new children’s toy stores in shopping centers. The group assesses prospects as good, fair, or poor. The records of assessments made by this group were examined, and it was found that for all stores that had annual sales over $1,000,000, the assessments were good for 70%, fair for 20%, and poor for 10%. For all stores that turned out to be unsuccessful, the assessments were good for 20%, fair for 30%, and poor for 50%. It is known that 60% of new clothing stores are successful and 40% are unsuccessful.a. For a randomly chosen store, what is the probability that prospects will be assessed as good?b. If prospects for a store are assessed as good, what is the probability that it will be successful?c. Are the events “prospects assessed as good” and “store is successful” statistically independent?d. Suppose that five stores are chosen at random. What is the probability that at least one of them will be…arrow_forward
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- Holt Mcdougal Larson Pre-algebra: Student Edition...AlgebraISBN:9780547587776Author:HOLT MCDOUGALPublisher:HOLT MCDOUGAL