The Owner of a Small Clothing Store Is Concerned That

question 64

Essay

The owner of a small clothing store is concerned that only 28% of people who enter her store actually buy something. A marketing salesman suggests that she invest in a new line of celebrity mannequins (think Seth Rogan modeling the latest jeans…). He loans her several different "people" to scatter around the store for a two-week trial period. The owner carefully counts how many shoppers enter the store and how many buy something so that at the end of the trial she can decide if she'll purchase the mannequins. She'll buy the mannequins if there is evidence that the percentage of people that buy something increases.
-The owner talked the salesman into extending the trial period so that she can base her decision on data for a full month. Will the power of the test increase, decrease, or remain the same?

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Definitions:

Income Items

Generally refer to all the items that contribute to a company's net income, including revenue from sales, services, and other sources.

Reportable Segment

A component of a business that can be separately distinguished for financial reporting purposes, typically based on product line or geographic area.

Operating Segment

A distinct unit within a business that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses related to transactions with other components of the same business.

Identifiable Cash Flows

Cash flows that can be directly linked to a specific project, investment, or business segment.