The CEO of a cable company claims that at least 80% of his more than 1 million customers
are satisfied with service his company provides. You are one of his customers and you are not
happy with the service. You have also heard several of your friends complain about the cable
service. Based on these complaints, you believe that the CEO’s statement may be false. To test
the claim, you select a sample random sample of 103 customers and find that 77 of them are
satisfied with the service. Based on your sample result, do you think the CEO’s claim is false?.
Test the CEO’s claim at the 5% significance level.
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Answer:
CEO claim is incorrect
Step-by-step explanation:
Out of 103 picks, 77 people have been found satisfied. This means that,
= 77 / 103
= 74.7 %
Now if we consider the significance level to be 5 %, it means that the lower acceptable range as per CEO claim would be = 80 - (5 / 2) = 77.5 %
Since 74.7 is less than 77.5. this means that CEO statement is incorrect
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