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 company contacts 600 people selected at random, and 133 can remember the ad.
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) Should the company renew the contract? Support your recommendation with an appropriate test.
d) Explain carefully what your P-value means in this context.