Question

An International company is trying to decide whether to open a new factory in a country that currently does not have any operation. The company will open the new factory if there is evidence that more than 5,000 of the 20,000 potential customers in the area have a favorable view of its products. It conducts a telephone poll of 300 randomly selected potential customers in the area and finds that 96 have a favorable view.

The decision on the hypothesis test using a 5% level of significance is:

• A.

  to fail to reject H₀ in favor of H₁.

• B.

  we cannot tell what the decision should be from the information given.

• C.

  to accept H₀ in favor of H₁.

• D.

  to reject H₀ in favor of H₁.

Answer 1

Answer: D. to reject H0 in favor of H1.

Explanation:

n= 300, x= 96

Null and alternative hypothesis is

Ho: P 0.25

H1: P > 0.25

Calculate test statistics

z= 2.8

test statistics= 2.8

now calcaulate P-Value

P-Value = 1 - P(z < 2.8)

using normal z table we get

P(z < 2.8) =0.9974

P-Value = 1 - 0.9974

P-Value = 0.0026

decision rule is

Reject Ho if (P-Value) < ( )

here (P-Value= 0.0026) < ( =0.05)

Null hypothesis is rejected.

D. to reject H0 in favor of H1.