You have been hired as a consultant by building contractor, who have been sued by the owners' representatives of a large condominium project for shoddy construction work. In order to assess the damages for the various units, the owners' association sent out a letter to owners and asked if people were willing to make their units available for destructive testing. Destructive testing was conducted in some of these units as a result of the responses. Based on the tests, the owners' association inferred the damage over the entire condo complex. Do you think that the inference is valid in this case?   a).  No, the inference is not valid. It is an example of sample selection bias because owners whose units were relatively more damaged were more likely to make theor units available for destructive testing.   b).  No, the inference is not valid because not all units were tested.   c).  Yes, the inference is valid. The study will correctly determine the incidence of damages in the concominium building.   d).  No, the inference is not valid. It is an example of errors in variable bias, because destructive testing is not an accurate method of assessing damages.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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You have been hired as a consultant by building contractor, who have been sued by the owners' representatives of a large condominium project for shoddy construction work. In order to assess the damages for the various units, the owners' association sent out a letter to owners and asked if people were willing to make their units available for destructive testing. Destructive testing was conducted in some of these units as a result of the responses. Based on the tests, the owners' association inferred the damage over the entire condo complex. Do you think that the inference is valid in this case?

 

a). 

No, the inference is not valid. It is an example of sample selection bias because owners whose units were relatively more damaged were more likely to make theor units available for destructive testing.

 

b). 

No, the inference is not valid because not all units were tested.

 

c). 

Yes, the inference is valid. The study will correctly determine the incidence of damages in the concominium building.

 

d). 

No, the inference is not valid. It is an example of errors in variable bias, because destructive testing is not an accurate method of assessing damages. 

 

 

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