The management of a chain of hotels avoids intervening in the local management of its franchises unless problems become far too common to ignore. Management believes that solving the problems is better left to the local staff unless the measure of satisfaction drops below 33%. A survey of 80 guests who recently stayed in the franchise in St. Louis found that only 20% of the guests indicated that they would return to that hotel when next visiting the city. Should management intervene in the franchise in St. Louis?
(a) State the null and alternative hypotheses.
(b) Describe Type I and Type II errors in this context.
(c) Find the p-value of the test. Do the data supply enough evidence to reject the null hypothesis if α = 0.025?