PolicyInteractive of Eugene, Oregon conducted a study of American adults in April 2014 for the Center for a New American Dream. Seventy-five percent of the adults included in this study said that having basic needs met is very or extremely important in their vision of the American dream (www.newdream.org). A recent sample of 1500 American adults were asked the same question and 72% of them said that having basic needs met is very or extremely important in their vision of the American dream.
a. Using the critical-value approach and α = .01, test if the current percentage of American adults who hold the above mentioned opinion is less than 75%.
b. How do you explain the Type I error in part a? What is the probability of making this error in part a?
c. Calculate the p-value for the test of part a. What is your conclusion if α = .01?