A bank is testing a new method for getting delinquent customers to pay their past-due credit card bills. The standard way was to send a letter (costing about $0.45) asking the customer to pay. That worked 30% of the time. The bank wants to test a new method that involves sending a DVD to customers encouraging them to contact the bank and setup a payment plan. Developing and sending the video costs about $10 per customer.
1. What is the parameter of interest?
A) past-due credit card bills
B) proportion of customers who are delinquent in paying their credit card bill
C) proportion of customers who pay their credit card bill on time
D) proportion of delinquent customers who pay their credit card bill
2. Identify the null and alternative hypotheses:
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1. The parameter of interest in this case would be the proportion of delinquent customers who pay their credit card bill.
2. The null hypothesis (H0) and alternative hypothesis (Ha) can be set up as follows:
Null hypothesis (H0): There is no difference in the proportion of delinquent customers who pay their credit card bill when using the new DVD method compared to the standard letter method.
Alternative hypothesis (Ha): The proportion of delinquent customers who pay their credit card bill is higher when using the new DVD method compared to the standard letter method.
1. The parameter of interest is option D) proportion of delinquent customers who pay their credit card bill.
2. Null hypothesis: The proportion of delinquent customers who pay their credit card bill using the standard letter method is the same as the proportion who pay using the DVD method.
Alternative hypothesis: The proportion of delinquent customers who pay their credit card bill using the DVD method is higher than the proportion who pay using the standard letter method.