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Direct mail advertisers send solicitations (a.k.a. “junk mail”) to thousands of potential
customers in the hope that some will buy the company’s product. The acceptance rate
is usually quite low. Suppose a company wants to test the response to a new flyer, and
sends it to 1024 people randomly selected from their mailing list of over 200,000 people.
They get orders from 130 of the recipients.
(a) Create a 90% confidence interval for the percentage of people the company contacts
who may buy something.
(b) Explain what this interval means.
(c) Explain what “90% confidence” means.
(d) The company must decide whether to now do a mass mailing. The mailing won’t
be cost-effective unless it produces at least a 5% return. What does your confidence
interval suggest? Explain

Sagot :

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