Question

Suppose that a particular tire company has historically controlled 42% of the market. Before advertising this number, tests are performed to see if this percent has changed. A random sample of 550 current car owners reveals that 219 of them have this company’s tires.

a. (1 pt.) Write out Ho and Ha to test if the percent market share differs from the historical norm.

b. (1 pt.) Using MegaStat, calculate the p-value and attach your output sheet printout.

c. (1 pt.) Can we reject Ho at the .05 significance level? CAREFULLY EXPLAIN WHY OR WHY NOT. Can we be 95% confident that percent of market share is different from the historical level?

I think part A would be Ho:p=.42 Ha does not equal .42

Answer 1

Solution:

a. The null and alternative hypotheses are;

b. The p-value is:

c. We fail to reject the H0 at the 0.05 significance level because the p-value is greater than the significance level, we, therefore, fail to reject the H0

Therefore, we can not be 95% confident that percent of market share is different from the historical level