Question: When working properly, a machine that is used to make chips for calculators does not produce more than 4 percent defective chips. Whenever the machine produces more than 4 percent defective chips, it needs an adjustment. To check if the machine is working properly, the quality control department at the company often takes samples of chips & inspects them to determine if they are good or defective. One such random sample of 200 chips taken recently from the production line contained twelve defective chips. What would your conclusion be if the significance level is 2.5 percent?

Step [A] State the null & alternative hypotheses.

Step [B] Make the appropriate test statistics & the rejection of your test.

Step [C] Calculate the value of the test statistic.

Step [D] Make a decision

Step [E] Find the p-value for the test of part a. What is your conclusion if α = 0.1?