Jack McCombs Is the Owner of Several Firehouse Subs Sandwich

question 67

Multiple Choice

Jack McCombs is the owner of several Firehouse Subs sandwich shops in Anytown.He has been spending $200,000 a year in various media in Anytown in an attempt to build awareness of his stores.Instead of continuing to spend the same amount on advertising every year,Jack wants an assessment as to what he has gained from the advertising he has paid for.He is interested in knowing what percentage of the population in Anytown is aware of his store's name,menu,and locations - three factors for which he has attempted to build awareness.His advertising agency quoted him a price for a survey and told him they would use a sample size of 150,and that they were assuming 35 percent of the respondents would be aware of his advertising.Jack was reluctant to use the advertising agency to conduct the survey.He felt like he needed another firm so as to avoid any conflict of interest.He found a marketing researcher in town who was certified as a CPR by the Marketing Research Association.The CPR asked Jack how accurate he wanted the results of the survey to be.Jack said he wanted the percentage to be within ±3 percent of the real population percentage.Assuming he wanted to be 95 percent confident of the accuracy of the results,the CPR used the following formula to determine the accuracy of the survey recommended by the ad agency: ± sample error percent = 1.96 ∗ the square root of pq/n.Using the formula,what would be the sample error if Jack were to use the ad agency survey recommendation?

• A)±3 percent
• B)±4 percent
• C)±5 percent
• D)±6 percent
• E)±7 percent

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Definitions:

Expected Utility

The anticipated satisfaction or benefit received from an outcome, weighted by the probability of different outcomes occurring.

Risk-averse

The preference to avoid risks, favoring safer outcomes over potentially higher but uncertain returns.

Probability

The likelihood or chance of an event occurring.

Expected Utility

A theory in economics that explains how people make decisions under uncertainty, based on the anticipated satisfaction or utility from outcomes.