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Chapter 9: Q T9.11 (page 616)

1 A software company is trying to decide whether to produce an upgrade of one of its programs. Customers would have to pay \(100 for the upgrade. For the upgrade to be profitable, the company must sell it to more than 20% of their customers. You contact a random sample of 60 customers and find that 16 would be willing to pay \)100 for the upgrade.

a. Do the sample data give convincing evidence that more than 20% of the company鈥檚 customers are willing to purchase the upgrade? Carry out an appropriate test at the 伪=0.05significance level.

b. Which would be a more serious mistake in this setting鈥攁 Type I error or a Type II error? Justify your answer.

c. Suppose that 30% of the company鈥檚 customers would be willing to pay $100 for the upgrade. The power of the test to detect this fact is0.60. Interpret this value.

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Part (a)

Part (b)

Part (c)

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01

Part (a) Step 1:Given informaion

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