An inventor has developed a system that allows visitors to museums, zoos, and other attractions to get information at the touch of a digital code. For example, zoo patrons can listen to an announcement (recorded on a microchip) about each animal they see. It is anticipated that the device would rent for $3.00 each. The installation cost for the complete system is expected to be about $400,000. The Milwaukee Zoo is interested in having the system installed, but management is uncertain about whether to take the risk. A financial analysis of the problem indicates that if more than 10% of the Zoo visitors rent the system the zoo will make a profit. To help make the decision, a sample of 400 zoo visitors is given details of the system’s capabilities and cost. Forty eight people say they would rent the device.
An inventor has developed a system that allows visitors to museums, zoos, and other attractions to get information at the touch of a digital code. For example, zoo patrons can listen to an announcement (recorded on a microchip) about each animal they see. It is anticipated that the device would rent for $3.00 each. The installation cost for the complete system is expected to be about $400,000. The Milwaukee Zoo is interested in having the system installed, but management is uncertain about whether to take the risk. A financial analysis of the problem indicates that if more than 10% of the Zoo visitors rent the system the zoo will make a profit. To help make the decision, a sample of 400 zoo visitors is given details of the system’s capabilities and cost. Forty eight people say they would rent the device.
a) Can the management of the zoo conclude at the 5% level of significance that the investment would result in a profit? Your conclusion must be in terms of the P-Value as well as setting up a Rejection Region. You must show all necessary work.
b). What type of error is possible and describe this error in terms of the problem.
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