Reference no: EM13139504
suppose that a company rents franchise rights to its name (this means that another group runs the business in the company's name for a region; mcdonalds is an example of a franchising company). it requires that "customers loyalty" (meaning customers are willing to return to the store) be 85%. They are investigating a renter-called a "franchisee" to see if there is enough evidence to show that their customer loyalty is below standard. suppose that the company uses the 7% level of significance. the company will randomly sample 100 customers to see if they are loyal.
a) state the hypotheses and give (and if possible, check) the assumptions necessary to perform a hypothesis test.
b) what is the rejection region for this test?
c) out of the 100 customers sampled, the company found 79 were loyal. is this enough evidence to show that the franchisee has below-standard customer loyalty? (you do not need to write the hypotheses or assumptions and you may use the results from part b.)
d) based on your conclusion to part c, are you at risk of making Type I error, a Type II error, neither, or both?
e) give a 93% confidence interval for the probability that a randomly selected customer is "loyal"
f) do your results in parts c and e appear to "agree"? if not, give a reason why it is ok that they don't.
g) if you were with the franchisee, would you want the level of significance to be higher or lower? why?
h) if you used the franchisee's level of significance, would your power be higher or lower than before or would it not change?
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: If you were with the franchisee, would you want the level of significance to be higher or lower? why? if you used the franchisee's level of significance, would your power be higher or lower than before or would it not change?
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