A marketing research company is estimating the average total compensation of CEOs in the service industry. Data were randomly collected from 18 CEOs and the 95% confidence interval for the mean was calculated to be ($2,181,260, $5,836,180). What additional assumption is necessary for this confidence interval to be valid?
A) The sample standard deviation is less than the degrees of freedom.
B) None. The Central Limit Theorem applies.
C) The population of total compensations of CEOs in the service industry is approximately normally distributed.
D) The distribution of the sample means is approximately normal.

Question

Quizplus · Accepted Answer

The assumption necessary for the confidence interval to be valid is that the population of total compensations of CEOs in the service industry is approximately normally distributed, especially since the sample size is small (n=18).

A Marketing Research Company Is Estimating the Average Total Compensation