A satellite TV provider finds that 15% of their customers switch providers when a discount offer expires. A consultant tries a small experiment and offers a random sample
Of customers a free 6 months of service if they commit to staying as a customer for two
Years. Not surprisingly, they find that the new switching rate is lower by a statistically
Significant amount. Should they offer short-term discounts to all their customers?
A) The p-value of the hypothesis test.
B) The cost of the service.
C) How much the switch is lowered (the effect size).
D) A, B and C.
E) Both B and C.

Question

Quizplus · Accepted Answer

The question asks for multiple pieces of information: the p-value of the hypothesis test (A), the cost of the service (B), and how much the switch rate is lowered (C). The answer is D because all three pieces of information are needed to make an informed decision on whether or not to offer short-term discounts to all customers. The p-value is important for determining the statistical significance of the decrease in switching rate, the cost of the service is important for determining if offering discounts is financially feasible, and the size of the effect (how much the switch rate is lowered) is important for determining if the decrease in switching is large enough to be worth offering discounts to all customers.

A Satellite TV Provider Finds That 15% of Their Customers