SOLUTION: Churn� is the term use to describe the rate at which a company losses customers to its competitors. In the communications industry it is believed that the churn rate between cell

Question 1121208: Churn� is the term use to describe the rate at which a company losses customers to its competitors.
In the communications industry it is believed that the churn rate between cell phone service
providers is more than 15 %. A telecommunications analyst surveyed a random sample of 560 cell
phone subscribers and established that 96 of them had changed service providers within the last
year.
3.1) Formulate a suitable null and alternative hypothesis for this situation
3.2) Select and compute the appropriate sample/test statistic
3.3) Formulate the decision rule by using α = 1 %
3.4) What can the communications industry learn from the outcome of this test ?
Answer by Boreal(15235) (Show Source): You can put this solution on YOUR website!
Ho: rate is 15% (>15% would not be wrong, but a two way test is more stringent.)
Ha: rate Not 15%
alpha=0.01
test statistic is a one sample proportion
critical value is |z|>2.576
calculation is (p hat-p)/sqrt (.15*.85/560), p hat= 96/560=0.171
(0.021)/0.0150=1.43
fail to reject. The rate may be 15%. Perhaps a larger sample size might show a difference.
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