A Travel Agent Wants to Determine If Clients Have a Preference

question 48

Essay

A travel agent wants to determine if clients have a preference of four different airlines. For a sample of 200 flight reservations, there were 70, 45, 48, and 37 reservations for the four different airlines.
A) Set up the competing hypotheses to test if the population proportions are not equal to each other.
B) Calculate the value of the test statistic.
C) Specify the critical value at the 5% significance level.
D) What is the conclusion of the hypothesis test?

• A) Set up the competing hypotheses to test if the population proportions are not equal to each other.
• B) Calculate the value of the test statistic.
• C) Specify the critical value at the 5% significance level.
• D) What is the conclusion of the hypothesis test?

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Definitions:

Adverse Selection

A situation in financial markets where buyers and sellers have different levels of information, leading to transactions that favor the party with more or better information.

Adverse Selection

A situation where asymmetric information leads to the selection of poor risks, often seen in insurance markets.

Pre-contractual Problem

Issues that arise before the formation of a contract, often relating to the disclosure of information or negotiation terms.

Incentive Compensation

A form of pay linked to an employee's performance, designed to motivate and reward that performance.