Question: Junk mail. Direct mail advertisers send solicitations (a.k.a. junk mail ) to thousands of potential customers in the hope that some will buy the company

Junk mail. Direct mail advertisers send solicitations

(a.k.a. junk mail ) to thousands of potential customers in the hope that some will buy the company s product.

The acceptance rate is usually quite low. Suppose a company wants to test the response to a new flyer, and sends it to 1000 people randomly selected from their mailing list of over 200,000 people. They get orders from 123 of the recipients.

a) Create a 90% confidence interval for the percentage of people the company contacts who may buy something.

b) Explain what this interval means.

c) Explain what 90% confidence means.

d) The company must decide whether to now do a mass mailing. The mailing won t be cost-effective unless it produces at least a 5% return. What does your confidence interval suggest? Explain.

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