A mail-order catalog company has developed a classification model to predict whether a prospective customer will place an order if he or she receives a catalog in the mail. If the prospective customer is predicted to place an order, then he or she is classified in Class 1; otherwise, he or she is classified in Class 0. The validation data set results in the following confusion matrix.

a. Compute the misclassification rate, accuracy rate, sensitivity, precision, and specificity of the classification model.
b. The confusion matrix was generated based on a cutoff rate of 0.5. If the cutoff rate is decreased to 0.25, will the sensitivity value increase or decrease? What about the specificity value?
c. If the profit from an order is much higher than the cost of sending a catalog, would the company benefit from a higher or lower cutoff rate for classifying prospective customers in Class 1 and Class 0?

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Actual Class Predicted Class 1 Predicted Class 0 Class 1 25 Class 0 816 75 84