2. The Ford Motor Company advertises on television that \"at least ninety-three

Question

2. The Ford Motor Company advertises on television that "at least ninety-three out of every one hundred trucks sold since 1964 are still on the job." The sales manager for a competing dealership believes that Ford is overexaggerating, and decides to test Ford's claim. He gathered longevity data for one hundred fifty Ford trucks sold since 1964, and found that one hundred thirty-five were still on the job. Use the five percent level of significance and test whether Ford's claim is correct, or whether the competitor's suspicions are correct. ROUND ALL CALCULATIONs TO SIX DECIMAL PLACES ii

Explanation / Answer

Null Hypothesis:

H0:p<.93

H1:p>=0.93

H1 is the claim.

level of signiifcance=5%=0.05

test statistic:

Z=p^-p/sqrt(p(1-p)/n

p^=x/n=135/150=0.9

Z=0.9-0.93/sqrt(0.93(1-0.93)/150)

Z=-1.440046

p=0.074934

p>0.05

Decision:

Do not Reject Null hypothesis.

Accept null hypothesis.

There is no sufficient statistical evidence at 5% level of significance to support the claim that atleast ninety three out of every one hundred trucks sold since 1964 are still on the job.

so competitor's suspicions are correct.

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