The company Performance Tires plans to engage in direct mail advertising. It is currently in negotiations to purchase a mailing list of the names of people who bought sports cars within the last three years. The owner of the mailing list claims that sales generated by contacting names on the list will more than pay for the cost of using the list. (Typically, a company will not sell its list of contacts, but provides the mailing services. For example, the owner of the list would handle addressing and mailing catalogs.) Before it is willing to pay the asking price of $3 per name, the company obtains a random sample of 225 names and addresses from the list in order to run a small experiment. It sends promotional mailings to each of these customers. The company makes a pro t of 20% on the gross dollar of a sale (not including the $3 cost of the name). For example, if a customer orders $100 worth of goods (i. e., gross dollar) the company makes a $20 profit. Required:
a. Why would a company want to run an experiment? Why not just buy the list and see what happens?
b. Why would the holder of the list agree to allow the potential purchaser to run an experiment?
c. Why is a hypothesis test relevant in this situation?
d. Describe the appropriate hypothesis and present the statistical hypothesis. Ensure that you report it in words /sentences and in symbolic form.