Question

Eagle Outfitters is a chain of stores specializing in outdoor apparel and camping gear. They are con-

sidering a promotion that involves mailing discount coupons to all their credit card customers. This

promotion will be considered a success if more than 10% of those receiving the coupons use them.

Before going national with the promotion, coupons were sent to a sample of 100 credit card customers.

a. Develop hypotheses that can be used to test whether the population proportion of those who will

use the coupons is sufficient to go national.

b. The associated data file contains the sample data. Develop a point estimate of the population proportion.

C.

Use = 0:05 to conduct your hypothesis test. Should Eagle go national with the promotion?

Answer 1

In this example:

n= 100

x= 13

To determine the hypothesis:

H0= p>0.10

In order to obtain the sample proportion, you need to divide the number of successes (13) by the sample size (100).

p= 13/100

p= 0.13

To determine the test statistic:

p= P ( Z > 1.10 ) = P (Z < -1.10 ) = 0.1357

If p is smaller than the significant level, you would reject the null hypothesis. However,

p>0.05

• Based on the critical value, we fail to reject H0.

• Based on the result of the hypothesis test, Eagle Outfitters should go national with the promotion.