Test for Proportion
1. Vacation occupancy rates were expected to be up during March 2008 in Myrtle Beach, South Carolina
(The Sun News, February 29, 2008). Data in the file Occupancy will allow you to replicate the findings
presented in the newspaper. The data show units rented and not rented for a random sample of vacation
properties during the first week of March 2007 and March 2008.
a. Estimate the proportion of units rented during the first week of March 2007 and the first week of
March 2008.
b. Provide a 95% confidence interval for the difference in proportions.
c. On the basis of your findings, does it appear March rental rates for 2008 will be up from those a year
earlier?
2. For the week ended January 15, 2009, the bullish sentiment of individual investors was 27.6% (AAII
Jouranl, February 2009). The bullish sentiment was reported to be 48.7% one week earlier and 39.7%
one month earlier. The sentiment measures are based on a poll conducted by the American Assocation
of Individual Investors. Assume that each of the bullish sentiment measures was based on a sample size
of 240.
a. Develop a 95% confidence interval for the difference between the bullish sentiment measures for the
most recent two weeks.
b. Develop hypotheses so that rejection of the null hypothesis will allow us to conclude that the most
recent bullish sentiment is weaker than that of one month ago.
c. Conduct a hypotheses test of part (b) using α = .01. What is your conclusion?
3. Medical tests were conducted to learn about drug-resistant tuberculosis. Of 142 cases tested in New
Jersey, 9 were found to be drug-resistant. Of 268 cases tested in Texas, 5 were found to be drug-
resistant. Do these data suggest a statistically significant difference between the proportions of drug-
resistant cases in the two states? Use a .02 level of significance. What is the p-value, and what is your
conclusion?
4. A large automobile insurance company selected samples of single and married male policyholders
and recorded the number who made an insurance claim over the preceding three-year period.
a. Use α = .05. Test to determine whether the claim rates differ between single and married male policyholders.
b. Provide a 95% confidence interval for the difference between the proportions for the two populations.
5. Medical tests were conducted to learn about drug-resistant tuberculosis. Of 142 cases tested in New
Jersey, 9 were found to be drug-resistant. Of 268 cases tested in Texas, 5 were found to be drug-
resistant. Do these data suggest a statistically significant difference between the proportions of drug-
resistant cases in the two states? Use a .02 level of significance. What is the p-value, and what is your
conclusion?
6. Test Market case: Comparing Advertising Media: Suppose a new product was test marketed in the
Des Moines, Iowa, and Toledo, Ohio, metropolitan areas. Equal amounts of money were spent on
advertising in the two areas. However, different advertising media were employed in the two areas.
Advertising in the Des Moines area was done entirely on television, while advertising in the Toledo
area consisted of a mixture of television, radio, newspaper, and magazine ads. Two months after the
advertising campaigns commenced, surveys are taken to estimate consumer awareness of the product.
In the Des Moines area, 631 out of 1,000 randomly selected consumers are aware of the product, while
in the Toledo area 798 out of 1,000 randomly selected consumers are aware of the product. We define
p1 to be the proportion of all consumers in the Des Moines area who are aware of the product and p2 to
be the proportion of all consumers in the Toledo area who are aware of the product. Does using multiple
advertising media help spread more awareness at 5% level of significance.
7. In an article in the Journal of Advertising, Weinberger and Spotts compare the use of humor in
television ads in the United States and in the United Kingdom. Suppose that independent random
samples of television ads are taken in the two countries. A random sample of 400 television ads in
the United Kingdom reveals that 142 use humor, while a random sample of 500 television ads in the
United States reveals that 122 use humor.
a Set up the null and alternative hypotheses needed to determine whether the proportion of ads using
humor in the United Kingdom differs from the proportion of ads using humor in the United States.
b Test the hypotheses you set up in part a by using critical values and by setting a equal to .10, .05, .01,
and .001. How much evidence is there that the proportions of U.K. and U.S. ads using humor are
different?
c Set up the hypotheses needed to attempt to establish that the difference between the proportions of
U.K. and U.S. ads using humor is more than .05 (five percentage points). Test these hypotheses by using
a p-value and by setting a equal to .10, .05, .01, and .001. How much evidence is there that the difference
between the proportions exceeds .05?
d Calculate a 95 percent confidence interval for the difference between the proportion of U.K. ads using
humor and the proportion of U.S. ads using humor. Interpret this interval. Can we be 95 percent
confident that the proportion of U.K. ads using humor is greater than the proportion of U.S. ads using
humor?