1. The problem is about understanding the choice of significance level in hypothesis testing. 2. The significance level, often denoted as $\alpha$, is the threshold probability for rejecting the null hypothesis $H_0$. 3. Commonly, $\alpha$ is set at 5% (0.05), meaning if the p-value is less than 0.05, we reject $H_0$. 4. However, the significance level can be chosen based on the context or instructions given in the problem or memo. 5. In this case, since the question or text did not specify a significance level, the memo decided to use 1% (0.01) as a stricter criterion. 6. This means they only reject $H_0$ if the p-value is less than 0.01, which is more conservative than 5%. 7. The choice of 1% over 5% is a decision made by the memo's author to be more confident in rejecting $H_0$. 8. When no significance level is stated, it is important to clarify or assume a standard level (usually 5%) or follow instructions given. 9. Therefore, the memo's choice of 1% is a specific decision, not a general rule, and you should follow the significance level stated or agreed upon in your analysis. 10. Summary: The general significance level is 5%, but if the problem or memo specifies or assumes 1%, use that for decision-making.