2). Has the recent drop in airline passengers resulted in better on-time perform

Question

2). Has the recent drop in airline passengers resulted in better on-time performance? Before the recent economic downturn, one airline bragged that 92% of its flights were on time. A sample of 165 flights completed this year reveals that 153 were on time.

a). Can we conclude at the 5% level of significance that the airline’s on-time performance has improved? Your conclusion must be in terms of the P-Value as well as setting up a Rejection Region. You must show all necessary work.

b). What value of the significance level seems appropriate in this problem? Explain carefully.

c). What type of error is possible and describe this error in terms of the problem.

Explanation / Answer

Solution:

a) p = 153/165=0.93
std error = sqrt[(0.92)(1-0.92)/165] = 0.0211
test statistic = (0.93-0.92)/0.0211=0.4739
the critical value for a 1-sided test at the 0.05 level is 1.645; since test statistic < 1.645,
cannot conclude that on-time performance has improved.

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