Posted by **sue** on Tuesday, July 27, 2010 at 7:32pm.

Clickfraud has become a major concern as more and more companies advertise on the Internet. When Google places an ad for a company with its search results, the company pays a fee to Google each time someone clicks on the link. That’s fine when it’s a person who’s interested in buying a product or service, but not so good when it’s a computer program pretending to be a customer. Analysis of 1200 clicks coming into a business during a week identified 175 of these clicks as fraudulent.

• What is the difference between a critical value and a test statistic? How do you decide which test statistic to use?

• When is it appropriate to use a one-tailed test versus a two-tailed test? Does the direction of the test affect statistical significance? Explain.

• What is a P-value? What does a P-value of 0.0000001 mean?

• What are degrees of freedom? Illustrate with one new example.

• Under what conditions does it make sense to treat these 1200 clicks as a sample? What would be the population?

• Show the 95% confidence interval for the population proportion of fraudulent clicks in a form suitable for sharing with a nontechnical audience.

Based on the scenario above, if a company pays Google $4.50 for each click, give a confidence interval (again, to presentation precision) for the mean costs due to fraud per click

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