The employee manager of a large company would like to estimate the proportion of

Question

The employee manager of a large company would like to estimate the proportion of full-time employees who prefer adopting plan A of two available health care plans in the forthcoming annual enrollment period.

2. The employee manager believes that if the proportion of employees preferring plan A is less than 2%, then that plan should be dropped. A 95% confidence interval for the proportion of employees preferring plan A yields (2.05%; 4.12%). Based on this interval, what is the manager’s decision regarding whether or not to drop plan A?

i.   Drop the plan

ii. Do not drop the plan.

iii. Inconclusive. Need more information to make a decision

Explanation / Answer

Here, the employee manager believes that if the proportion of employees preferring plan A is less than 2%, then the plan should be dropped.

And, 95% confidence interval for the proportion of employees preferring plan A yields (2.05%,4.12%).

So, the manager's decision will be not to drop the plan.

I think option (ii) will be correct.

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