Using an incremental confidence factor of 1.58 (corresponding to the risk of incorrect acceptance of 10%),what is the incremental allowance for sampling risk?
A) $5,000
B) $7,900
C) $8,700
D) $23,700

Question

Quizplus · Accepted Answer

To calculate the incremental allowance for sampling risk, we need to use the following formula:

Incremental allowance for sampling risk = (incremental confidence factor) x (standard deviation of the population)

We are given the incremental confidence factor as 1.58. We do not have the standard deviation of the population, so we cannot calculate the exact incremental allowance for sampling risk. However, we can estimate it based on the answer choices.

We can see that the incremental allowance for sampling risk must be greater than $5,000, since answer choice A is too low. It must also be greater than $7,900, since answer choice B is too low.

Answer choice C is $8,700. This is a plausible estimate for the incremental allowance for sampling risk, since it is higher than the previous two answer choices.

Answer choice D is $23,700. This is too high to be a plausible estimate for the incremental allowance for sampling risk, since it is more than twice the amount of answer choice C.

Using an Incremental Confidence Factor of 1