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Customers who participate in a store鈥檚 free loyalty card program save money on their purchases but allow the store to keep track of the customer鈥檚 shopping habits and potentially sell these data to third parties. A Pew Internet & American Life Project Survey (January 2016) revealed that 225 of a random sample of 250 U.S. adults would agree to participate in a store loyalty card program, despite the potential for information sharing. Letp represent the true proportion of all customers who would participate in a store loyalty card program.

a. Compute a point estimate ofp

b. Consider a store owner who claims that more than 80% of all customers would participate in a loyalty card program. Set up the null and alternative hypotheses for testing whether the true proportion of all customers who would participate in a store loyalty card program exceeds .8

c. Compute the test statistic for part b.

d. Find the rejection region for the test if =.01.

e. Find the p-value for the test.

f. Make the appropriate conclusion using the rejection region.

g. Make the appropriate conclusion using the p-value.

Short Answer

Expert verified

a. The point estimate forp is 0.9

b.The hypotheses areH0:p=0.80 andHa:p>0.80.

c.The test statistic is 3.95.

d. The rejection region isZ0>2.326

e. The p-value for the test is 0.000039

f. Using the rejection region, we have sufficient evidence to conclude that the true proportion of all customers who would participate in a store loyalty card program exceeds .8

e. Using the p-value, we have sufficient evidence to conclude that the true proportion of all customers who would participate in a store loyalty card program exceeds .8

Step by step solution

01

Given information

As per Pew Internet & American Life Project Survey (January 2016), out of 250 U.S adults surveyed, 225 agree to participate in a store loyalty card program, despite the potential for information sharing.

That is

The size of the samplen=250

The sample proportion is

p^=225250=0.9

02

Point estimate for the population proportion

The point for the true proportion of all customers who would participate in a store loyalty card program isp^=0.9

03

Setting up the hypotheses

The null and alternative hypotheses are given as

H0:p=0.80

That is, the true proportion of all customers who would participate in a store loyalty card program does not exceed .8

And

Ha:p>0.80

That is, the true proportion of all customers who would participate in a store loyalty card program exceeds .8

04

Calculating the test statistic

The test statistic for testing store owner鈥檚 claim is

Z=p^-pp1-pn=0.90-0.800.801-0.80250=0.100.00064=3.95

05

Calculating the rejection region

We have first to find the critical value for the critical region

Here

:The level of significance

=.01

Using the standard normal table, the critical value at the 1% significance level is 2.326

Hence the rejection region is

Reject the null hypothesis if

Z0>2.326

Where

Z0is the value of the test statistic.

06

Calculating the p-value

We have Z=3.95, and the test is right-tailed (as an alternative hypothesis is right-tailed)

Therefore p-value in this scenario is

p-value=PZ>Z0=PZ>3.95=0.000039.....usingstandardnormaltable

07

Conclusion using critical region

We can see that

Z=3.95>2.326

Hence, we reject the null hypothesis.

Conclusion:

At a 1% significance level, we have sufficient evidence to conclude that the true proportion of all customers who would participate in a store loyalty card program exceeds .8

08

Conclusion using p-value

We can see that

p-value=0.000039<0.01

That is, the obtained p-value is less than the significance level.

Hence, we reject the null hypothesis.

Conclusion:

Based on the p-value, we have sufficient evidence to conclude that the true proportion of all customers who would participate in a store loyalty card program exceeds .8

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Most popular questions from this chapter

Feminized faces in TV commercials. Television commercials most often employ females or 鈥渇eminized鈥 males to pitch a company鈥檚 product. Research published in Nature (August 27 1998) revealed that people are, in fact, more attracted to 鈥渇eminized鈥 faces, regardless of gender. In one experiment, 50 human subjects viewed both a Japanese female face and a Caucasian male face on a computer. Using special computer graphics, each subject could morph the faces (by making them more feminine or more masculine) until they attained the 鈥渕ost attractive鈥 face. The level of feminization x (measured as a percentage) was measured.

a. For the Japanese female face, x = 10.2% and s = 31.3%. The researchers used this sample information to test the null hypothesis of a mean level of feminization equal to 0%. Verify that the test statistic is equal to 2.3.

b. Refer to part a. The researchers reported the p-value of the test as p = .021. Verify and interpret this result.

c. For the Caucasian male face, x = 15.0% and s = 25.1%. The researchers reported the test statistic (for the test of the null hypothesis stated in part a) as 4.23 with an associated p-value of approximately 0. Verify and interpret these results.

Which of the elements of a test of hypothesis can and should be specified prior to analyzing the data that are to be used to conduct the test

Consider the test of H0:=7. For each of the following, find the p-value of the test:

a.Ha:>7;z=1.20

b.Ha:<7;z=-1.20

c.Ha:7;z=1.20

A sample of five measurements, randomly selected from a normally distributed population, resulted in the following summary statistics: \(\bar x = 4.8\), \(s = 1.3\) \(\) .

a. Test the null hypothesis that the mean of the population is 6 against the alternative hypothesis, 碌<6. Use\(\alpha = .05.\)

b. Test the null hypothesis that the mean of the population is 6 against the alternative hypothesis, 碌\( \ne 6\). Use\(\alpha = .05.\)

c. Find the observed significance level for each test.

Consider the test \({H_0}:\mu = 70\) versus \({H_a}:\mu \ne 70\) using a large sample of size n = 400. Assume\(\sigma = 20\).

a. Describe the sampling distribution of\(\bar x\).

b. Find the value of the test statistic if\(\bar x = 72.5\).

c. Refer to part b. Find the p-value of the test.

d. Find the rejection region of the test for\(\alpha = 0.01\).

e. Refer to parts c and d. Use the p-value approach to

make the appropriate conclusion.

f. Repeat part e, but use the rejection region approach.

g. Do the conclusions, parts e and f, agree?

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