Question

Your company must charge $100 for a software upgrade to make a profit on its development. You must find out if your customers are willing to pay this much. A random sample of 72 customers finds that 21 would pay $100 for the upgrade. If the upgrade is to be profitable, you will need to sell it to more than 25% of your customers. Do the sample data provide good evidence that more than 25% are willing to buy at the 5% level of significance?

a. State the appropriate hypotheses.

b. Assuming the null hypothesis is true, the relevant sampling distribution has an approximate normal distribution with:

Mean =

Standard deviation =

c. The value of the standardized test statistic is __________________.

d. The P-value for this significance test is __________________.

e. Summarize the final conclusion of this significance test in context of the problem.

f. Give the 90% confidence interval for the relevant parameter.

Answer 1