8. From a population that is normally distributed with an unknown standard deviation, a sample of 25 elements is selected. For the interval estimation of μ, the proper distribution to use is the
(A) standard normal distribution
(B) \( z \) distribution
(C) \( t \) distribution with 26 degrees of freedom
(D) \( t \) distribution with 24 degrees of freedom

9. It is known that the population variance equals 484. With a 0.95 probability, the sample size that needs to be taken to estimate the population mean if the desired margin of error is 5 or less is (A) 25 (B) 74 (C) 189 (D) 75

10. The manager of an automobile dealership is considering a new bonus plan in order to increase sales. Currently, the mean sales rate per salesperson is five automobiles per month. The correct set of hypotheses for testing the effect of the bonus plan is (A) \( \mathrm{H}_0: \mu < 5 \) \( \mathrm{H}_{\mathrm{a}}: \mu \leq 5 \) (B) \( \mathrm{H}_0: \mu \leq 5 \) \( \mathrm{H}_{\mathrm{a}}: \mu > 5 \) (C) \( \mathrm{H}_0: \mu > 5 \) \( \mathrm{H}_{\mathrm{a}}: \mu \leq 5 \) (D) \( \mathrm{H}_0: \mu \geq 5 \) \( \mathrm{H}_{\mathrm{a}}: \mu < 5 \)

11. When the p-value is used for hypothesis testing, the null hypothesis is rejected if (A) \( p \) -value \( \leq \alpha \) (B) \( \alpha \leq p \) -value (C) \( p \) -value \( \geq \alpha \) (D) \( p \) -value \( = \alpha \)

12. If we are interested in testing whether the mean of population 1 is smaller than the mean of population 2, the (A) null hypothesis should state \( \mu_{1} - \mu_{2} < 0 \) (B) null hypothesis should state \( \mu_{1} - \mu_{2} > 0 \) (C) alternative hypothesis should state \( \mu_{1} - \mu_{2}\geq 0 \) (D) None of the other answers is correct.

13. Below you are given a partial computer output based on a sample of 16 observations. The estimated regression equation is (A) \( y = \beta_0 + \beta_1x_1 + \beta_2x_2 + \varepsilon \) (B) \( E(y) = \beta_0 + \beta_1x_1 + \beta_2x_2 + \varepsilon \) (C) \( \hat{y} = 12.924 - 3.682x_{1} + 45.216x_{2} \) (D) \( \hat{y} = 4.425 - 2.63x_{1} + 12.56x_{2} \)

14. The table below gives beverage preferences for random samples of teens and adults. We are asked to test for independence between age (i.e., adult and teen) and drink preferences. The result of the test is that the (A) hypothesis of independence can be rejected (B) hypothesis of independence cannot be rejected (C) test is inconclusive (D) None of these alternatives is correct.

1. If the government removes a binding price ceiling from a market, then the price received by sellers will (A) decrease and the quantity sold in the market will decrease. (B) decrease and the quantity sold in the market will increase. (C) increase and the quantity sold in the market will decrease. (D) increase and the quantity sold in the market will increase. Figure 1 Braavos' Production Possibilities Frontier Valyria's Production Possibilities Frontier

2. Refer to Figure 1. Without trade, Braavos produced and consumed 12 bolts and 36 nails and Valyria produced and consumed 14 bolts and 24 nails. Then, each country agreed to specialize in the production of the good in which it has a comparative advantage and trade 16 bolts for 38 nails. As a result, Braavos gained (A) 2 bolts and 2 nails and Valyria gained 2 bolts and 18 nails. (B) 4 bolts and 2 nails and Valyria gained 2 bolts and 14 nails. (C) 14 bolts and 38 nails and Valyria gained 16 bolts and 42 nails. (D) 16 bolts and 38 nails and Valyria gained 16 bolts and 38 nails.

3. The discovery of a new hybrid wheat would increase the supply of wheat. As a result, wheat farmers would realize an increase in total revenue if (A) the supply of wheat is elastic. (B) the supply of wheat is inelastic. (C) the demand for wheat is inelastic. (D) the demand for wheat is elastic.

4. One economist has argued that rent control is "the best way to destroy a city, other than bombing." Why would an economist say this? (A) He fears that low rents will cause lowincome people to move into the city, reducing the quality of life for other people. (B) He fears that rent control will benefit landlords at the expense of tenants, increasing inequality in the city. (C) He fears that rent control will cause a construction boom, which will make the city crowded and more pollutec. (D) He fears that rent control will eliminate the incentive to maintain buildings, leading to a deterioration of the city.

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