A magazine is considering the launch of an online edition. The magazine plans to go ahead only if it's convinced that more than 25% of current readers would subscribe. The magazine contacts a simple random sample of 500 current subscribers, and 137 of those surveyed expressed interest in subscribing.
What should the company do?
1. Test an appropriate hypothesis (α = 0.05) Use correct notation, draw the appropriate curve, and label all relevant areas.
2. Verify that the appropriate assumptions and conditions are satisfied before you proceed
3. State your conclusion in language that would be understood by the magazine's management.
Suppose you didn't do a Test of Hypothesis and chose instead to do a Confidence Interval.
1. What would be the 95% Confidence Interval for proportion found in the survey?
2. Does the Confidence Interval agree with your findings from the Test of Hypothesis? Discuss (3-5 sentences) how it does or does not.
This solution gives the step by step method for computing confidence interval for population proportion.