Explain why having low statistical power could be considered a limitation for a statistical test.

Statistical Power:

The power of any statistical test is defined as the probability that it will reject a false null hypothesis. It is inversely related to beta or the probability of making a Type II error. In short, power = 1 – β. To put it another way, studies should have no more than a 20% probability of making a Type II error (recall that power = 1 – β).

How is it limited?

Statistical power is affected chiefly by the size of the effect and the size of the sample used to detect it. Bigger effects are easier to detect than smaller effects, while large samples offer greater test sensitivity than small samples. A factor called sensitivity affects the power in power analysis.  The term sensitivity refers to the number of true positives out of the total of true positives and false negatives.

marginal cost is a microeconomic measure that us to evaluate the extent to which the level of production of a good is sustainable in accounting, that is, to how many quantities the company plans to profit from the production of the good.

the concept of marginal cost is simple, it means the cost of producing one more item. for example, in the case of pies, the marginal cost is the cost of producing one more pie than those that have already been produced.

it is important to understand that productive activity influences marginal cost. the marginal cost of some goods can be very high, while others may be insignificant. for example, the marginal cost of producing an extra plane is very high. already the marginal cost of a water company to provide 1l more water is derisory.

in the case of pies, the cost involves the inputs, the labor and the fixed cost, which involves the fixed space of the bakery. the level of production initially has the marginal cost decreasing because there is space and manpower available. however, to produce more you have to hire more workers and buy more inputs. if physical space is limited, workers will conflict with places, inputs and their productivity will decrease, meaning there is an optimum point of production for each level of space and manpower. from this point on, the productivity of the workers will be getting smaller because of lack of space, so that the marginal cost of producing one more pie will be increasing. so, although you have not posted the chart, but if you have the answer, you can see that my explanation goes according to the marginal cost curve that will increase from the 4th pie, answer (c).