You have been employed as a marketing executive by the Coca-Cola company to evaluate their progress in the century-long "cola war" with Pepsi. Historical data suggests that Coke has been preferred to Pepsi by 60% of high school children. To gather some up to date data on preferences, you have carried out a survey of a simple random sample of 125 high school children and asked them whether they prefer Coke or Pepsi. Of these, 58 replied that they prefer Coke and the remainder said they prefer Pepsi. 1. Carry out a hypothesis test for whether the preference for Coke over Pepsi among high school children exceeds the historical level. Use the 5% level of significance and a p value decision rule. 2. Compute a 95% confidence interval for the proportion of high school children who prefer Coke. Is there a relationship between this confidence interval and the finding of the

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You have been employed as a marketing executive by the Coca-Cola company to
evaluate their progress in the century-long "cola war" with Pepsi. Historical data
suggests that Coke has been preferred to Pepsi by 60% of high school children. To
gather some up to date data on preferences, you have carried out a survey of a
simple random sample of 125 high school children and asked them whether they
prefer Coke or Pepsi. Of these, 58 replied that they prefer Coke and the remainder
said they prefer Pepsi.
1. Carry out a hypothesis test for whether the preference for Coke over Pepsi
among high school children exceeds the historical level. Use the 5% level of
significance and a p value decision rule.
2. Compute a 95% confidence interval for the proportion of high school children
who prefer Coke.
Is there a relationship between this confidence interval and the finding of the
hypothesis test in question 1? Explain.
Transcribed Image Text:You have been employed as a marketing executive by the Coca-Cola company to evaluate their progress in the century-long "cola war" with Pepsi. Historical data suggests that Coke has been preferred to Pepsi by 60% of high school children. To gather some up to date data on preferences, you have carried out a survey of a simple random sample of 125 high school children and asked them whether they prefer Coke or Pepsi. Of these, 58 replied that they prefer Coke and the remainder said they prefer Pepsi. 1. Carry out a hypothesis test for whether the preference for Coke over Pepsi among high school children exceeds the historical level. Use the 5% level of significance and a p value decision rule. 2. Compute a 95% confidence interval for the proportion of high school children who prefer Coke. Is there a relationship between this confidence interval and the finding of the hypothesis test in question 1? Explain.
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