36. Ads A company is willing to renew its advertising contract with a local radio station only if the station can prove

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36 Ads A Company Is Willing To Renew Its Advertising Contract With A Local Radio Station Only If The Station Can Prove 1 (119.37 KiB) Viewed 11 times

36. Ads A company is willing to renew its advertising contract with a local radio station only if the station can prove that more than 20% of the residents of the city have heard the ad and recognize the company's product. The radio station conducts a random phone survey of 400 people. a) What are the hypotheses? b) The station plans to conduct this test using a 10% level of significance, but the company wants the significance level lowered to 5%. Why? c) What is meant by the power of this test? d) For which level of significance will the power of this test be higher? Why? e) They finally agree to use a = 0.05, but the company pro- poses that the station call 600 people instead of the 400 initially proposed. Will that make the risk of Type II error higher or lower? Explain.