ALL QUESTIONS ARE ABOUT 14 QUESTIONS.

**these questions related to chapter# 13 of the textbook **

**(Sharpe, Norean R.; De Veaux, Richard D. and Velleman, Paul F., Business Statistics, 2nd edition (2010), Pearson Education)**

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**QUESTION 1**

- For all questions on this homework, use the following information.

A technology company, MacInTouch, is concerned that the defect rate for the new color iPod exceeds the 2% threshold they hold as their quality standard. After inspecting 550 color iPods, they find that 16 of them have defects. Use the PHANTOMS approach to conduct a hypothesis test to determine whether the sample data suggest that the failure rate is higher than the 2% quality threshold.

Complete the P-step - state your population and parameter in symbols and words.

**QUESTION 2**

1. Complete the H-step: state your null and alternative hypotheses in both symbols and words.

**QUESTION 3**

1. The MacInTouch company is committed to quality standards for its product and its policy is to recall all product if it is suspected that quality standards have not been met.

Describe the cost implications of making a Type I error in the context of this problem.

**QUESTION 4**

1. Describe the cost implications of making a Type II error in the context of this problem.

**QUESTION 5**

1. Based on the relative cost of the two errors, what do you think would be an appropriate significance level to use for this test? There is no correct answer here, so you must explain your answer for credit.

**QUESTION 6**

1. Complete the A-step: Assess the conditions required in order for this hypothesis test to be valid. State each condition, then state how you assess the condition, and finally whether the condition has been met. Assume that the population size is 10,000 color iPods.

**QUESTION 7**

1. Complete the N-step: name the test procedure that you will be using.

**QUESTION 8**

1. Complete the T-step: calculate the test statistic. *In order to receive full credit for this problem, you must show how the test statistic is computed.*

**QUESTION 9**

1. Complete the O-step: obtain the p-value

**QUESTION 10**

1. Complete the M-step: Make a comparison between your significance level and your p-value, use the comparison to choose between the null and alternative hypotheses. Use a significance level of 5%.

**QUESTION 11**

1. Complete the S-step: state your conclusion** in the context of the problem**. No credit will be given if the conclusion is stated in generic terms.

**QUESTION 12**

1. Based on your conclusion above, what type of error could we have made? State the type of error and what that error actually means in the context of the problem.

**QUESTION 13**

1. When there is a very high cost of making a type I error, we might be tempted to use an extremely small alpha level. What would be the drawback for such a choice? State your answer in the context of this problem.

**QUESTION 14**

1. Would your conclusion have changed if you had used a 10% significance level rather than a 5% significance level? *You must explain your answer for full credit.*

Subject | Business |

Due By (Pacific Time) | 09/05/2014 08:00 pm |

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