Airline companies recognize that empty seats represent lost revenues that can ne

Question

Airline companies recognize that empty seats represent lost revenues that can never be recovered. To avoid losing revenues, the companies often book more passengers than there are available seats. Then, when a flight experiences fewer no-shows than expected, some passengers are 'bumped' from their flights (are denied boarding). Incentives are provided to encourage passengers to give up their reserved seat voluntarily, but occasionally some passengers are involuntarily bumped from the flight. Obviously, these incidents can reflect poorly on customer satisfaction. Suppose Southwest Airlines would like to estimate the true proportion of involuntarily bumped passengers across all domestic flights in the industry. In a pilot sample of 587 domestic passengers, 248 were involuntarily bumped. What is the estimate of the population proportion and what is the standard error of this estimate?

Question 2 options:

1)

2)

3)

4)

5)

1)

Estimate of proportion: 0.422, Standard error: 0.0008.

2)

Estimate of proportion: 0.422, Standard error: 0.0204.

3)

The true population proportion is needed to calculate this.

4)

Estimate of proportion: 0.578, Standard error: 0.0204.

5)

Estimate of proportion: 0.578, Standard error: 0.0008.

Explanation / Answer

1) estmated proportion p=248/587 =0.4225

therefore option 2 is correct

std error       =Se            =(p*(1-p)/n) = 0.0204

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