An airline claims that it rarely loses a passenger\'s checked luggage, and, if c

Question

An airline claims that it rarely loses a passenger's checked luggage, and, if checked luggage is lost, 90% of the luggage is recovered and returned to the owner within 24 hours. A consumer group believes the 24-hour recovery rate of lost luggage is actually lower (worse) than the airline's claim. They surveyed a large random sample of the airline's customers and found that 103 of 122 people who had lost luggage were reunited with the missing items within 24 hours.

A z-test statistic and p-value were calculated for the correct null and alternative hypotheses. Based on the p-value and alpha level for the test, the decision was made to reject the null hypothesis. Given this information, the difference between the true 24-hour recovery rate for lost luggage for this airline and 0.9 is:

A. Practically Significant
B. Statistically Significant

A only

B only

Both A and B

Neither A nor B

A only

B only

Both A and B

Neither A nor B

Explanation / Answer

Since we reject the null hypothesis, this shows that the the result is statistically significant and the 24-hour recovery rate of lost luggage is actually lower (worse) than the airline's claim but we know, 103 of 122 people or 103/122 = 84%, who had lost luggage were reunited with the missing items within 24 hours. This percentage is quite high. Therefore, its not practically significant. Therefore, correct option is "A only".

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