Direct mail advertisers send solicitations (a.k.a. "junk mail") to thousands of potential customers in the hope that some will buy the company's product. The response rate is usually quite low. Suppose a company wants to test the response to a new flyer, and sends it to 1000 people randomly selected from their mailing list of over 200,000 people. They get orders from 123 of the recipients.

Create a 90% confidence interval for the percentage of people the company contacts who may buy something.My answer is (0.106,0.14)
Explain what this interval means. Need help with this part.
Explain what "90% confidence" means.Need help with this part.
The company must decide whether to now do a mass mailing. The mailing won't be cost-effective unless it produces at least a 5% return. What does your confidence interval suggest? Explain. My explanation is Our confidence interval suggests that the company should do mass mailings. The entire interval is well above the cutoff of 5%.

1 answer

90% confidence interval indicates that 90% of the confidence intervals that you form using the same procedure will contain the true mean of the population.

You had a sample and you are trying to predict the mean response from the total population. That is why we create a confidence interval.

If I was going to answer the question what does this interval mean... I cannot say that there is a 90% chance that the interval contains the true population number. I can say that I am 90% confidence that the interval contains the population number. I can also say that 90% of the intervals formed in this manner will contain the true popoulation number.

I know it is confusing. This is one of the hardest concepts for students.