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Tipping points in daily deal transactions? Online 鈥渄aily deal鈥 sites (e.g., Groupon) offer customers a voucher to purchase a product at discount prices. However, the number of voucher purchases must exceed a predetermined number before the deal becomes active. This key number is termed the 鈥渢ipping point鈥 in marketing. Characteristics of the tipping point were investigated in the Journal of Interactive Marketing (February 2016). A sample of 2,617 vouchers purchased from daily-deal sites in Korea had a mean tipping point of 112 sales with a standard deviation of 560 sales. The researchers want to estimate the true mean tipping point of all daily deal offerings in Korea with 95% confidence. Find and practically interpret this interval estimate.

Short Answer

Expert verified

It is 95% confident that the true mean tipping point of all daily deal offerings in Korea lies between the interval 90.54 and 133.46.

Step by step solution

01

Given information

Let X is the tipping points.n=2617,=560and x=112.

02

Computing Confidence Interval

For the confidence level 95%, the level of significance is 0.95.

1=0.95=0.052=0.025

From table, the value ofz2 is given below:

z2=z0.025=1.96

Let, the confidence interval as,

xz2n=1121.965602617=1121.9610.95=11221.46

That is 11221.46,112+21.46=90.54,133.46.

Therefore, the 90% confidence interval for is (90.54, 133.46).

Hence, it is 95% confident that the true mean tipping point of all daily deal offerings in Korea lies between the interval 90.54 and 133.46.

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