Exercise #2

Question

As a marketing analyst for Imperial Products, your task is to determine if a new product is worth marketing nationwide. The director of marketing has stated that at least 85percent of the public must express some desire for the product and, for those who exhibit an interest, the average cost they are willing to pay must be at least $47.50. The director insists that you be 95 percent certain of your findings.

To respond to the director’s request, you survey 50 potential consumers regarding their interest in the product. Thirty-four express an interest in purchasing it. The maximum price each would be willing to pay is shown below. How would you reply to the director’s request for information? Should the product be marketed? How large should the sample be if you want to maintain a 95 percent level of confidence and suffer a maximum error of $2.00 in your estimate of the highest price consumers are willing to pay?

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Maximum Prices
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47 62 46
43 53 34
54 45 35
65 36 32
54 45 31
34 36 25
38 37 56
35 43 65
43 48 54
37 46 65
54 42 47
63
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