A major video rental chain recently decided to allow customers to rent movies for three nights rather than one. The marketing team that made this decision reasoned that at least 70% of the customers would return the movie by the second night anyway. A sample of 500 customers found 68% returned the movie prior to the third night.

a. Given the marketing team’s estimate, what would be the probability of a sample result with 68% or fewer returns prior to the third night?

b. Based on your calculations, would you recommend the adoption of the new rental policy? Support your answer with statistical reasoning and calculations.

Computer Database Exercises