A telecommunications company provided its cable TV subscribers with free access to a new channel for a month. It then chose a sample of 550 viewers and asked them whether they would be willing To pay an extra $10 per month to continue access to the channel. A total of 25 replied that they Would be willing to pay. The marketing director of the company claims that more than 5% of all its Subscribers would be willing to pay. Can you conclude that the director's claim is true? Use the $\alpha = 0.05$ level of significance.

Question

Quizplus · Accepted Answer

The proportion of the sample willing to pay is $ \frac{25}{550} = 0.0455 $ or 4.55%, which is less than 5%. Without conducting a formal hypothesis test, this initial observation suggests that the director's claim that more than 5% of all subscribers would be willing to pay is not supported by the sample data.

A Telecommunications Company Provided Its Cable TV Subscribers with Free α=0.05\alpha = 0.05α=0.05

A Telecommunications Company Provided Its Cable TV Subscribers with Free $\alpha = 0.05$