A Satellite TV Provider Finds That 15% of Their Customers

question 19

Multiple Choice

A satellite TV provider finds that 15% of their customers switch providers when a discount offer expires. A consultant tries a small experiment and offers a random sample
Of customers a free 6 months of service if they commit to staying as a customer for two
Years. Not surprisingly, they find that the new switching rate is lower by a statistically
Significant amount. Should they offer short-term discounts to all their customers?

• A) The p-value of the hypothesis test.
• B) The cost of the service.
• C) How much the switch is lowered (the effect size).
• D) A, B and C.
• E) Both B and C.

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Definitions:

Generalized Reciprocity

A mode of exchange in which the value of the gift is not calculated, nor is the time of repayment specified.

Balanced Reciprocity

A mode of exchange in which the giving and the receiving are specific as to the value of the goods and the time of their delivery.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, with little government intervention.

Redistributing Income

The process of reallocating wealth and income across a society, typically through taxation and government programs, to reduce economic inequality.