Question

How would the manager in charge of the promotional programs concerning residential customers use the results to the following? Use your answer to the following (as determined in the previous problem). Put your response in practical terms.

The telephone company wants to estimate the proportion of households that would purchase an additional telephone line if it were made available at a substantially reduced installation cost. A random sample of 500 households is selected. The results indicate that 135 of the households would purchase that additional telephone line at a reduced installation cost.

Set up a 99% confidence interval estimate of the population proportion of households that would purchase the additional telephone line.

Answer 1

We need to construct the 99% confidence interval for the population proportion. We have been provided with the following information about the number of favorable cases:

Favorable Cases X =	135
Sample Size N =	500

The sample proportion is computed as follows, based on the sample size N=500 and the number of favorable cases X=135:

The critical value for is .

The corresponding confidence interval is computed as shown below:

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