When an observation is made and we see a value greater than the threshold suggested by the theory, we would like to known the probability of getting the larger value due simply to chance rather than to the event being driven by the theory. For this, we need to known the right-tail probabilities under the null hypothesis.

If marginal cost is greater than average cost, then average cost will increase. In this case, average variable cost will equal $6.53 after the 10th sweater is produced.

Let A denote the event she passes the first exam and B denote the event she passes the second exam, then P(A or B) = P(A) + P(B) - P(A and B) = 0.85 + 0.80 - 0.78 = 0.87.