Question

Direct mail advertisers send solicitations ("junk mail") to thousands of potential customers in the hope that some will buy the company's product. The response rate is usually quite low. Suppose a company wants to test the response to a new flyer and sends it to 1180 people randomly selected from their mailing list of over 200,000 people. They get orders from 115 of the recipients. Use this information to complete parts a through d.

a) Create a 90% confidence interval for the percentage of people the company contacts who may buy something.

b) Explain what this interval means.

c) Explain what 90% confidence means.

d) The company must decide whether to now do a mass mailing. The mailing won't be cost effective unless it produces at least a 5% return. What does your confidence interval suggest? Explain.

Answer 1