Suppose we wish to test the hypothesis that an internship program allows its interns to earn $2,750 per semester and let us assume that this hypothesis is, in fact, true. Which of the following best illustrates the logic of hypothesis testing at the 99% confidence level?
A) From among 100 samples, 99 percent of them would generate means that fall outside + or - 2.58 z scores.
B) From among 99 samples, 100 percent of them would generate means that fall within + or - 2.58 z scores.
C) From among 100 samples, 1 percent of them would generate means that fall outside + or - 2.58 z scores.
D) From among 100 samples, 1 percent of them would generate means that fall outside + or - 1.96 z scores.
E) From among 95 samples, 1 percent of them would generate means that fall outside + or - 1.96 z scores.

Question

Quizplus · Accepted Answer

Hypothesis testing involves determining the likelihood of obtaining a sample mean that is significantly different from the hypothesized population mean. In this case, we want to test if an internship program allows its interns to earn $2,750 per semester. To do so, we can use a z-test with a 99% confidence level. The critical z-score for a 99% confidence level is 2.58 (found using a z-table). Therefore, if we take 100 samples, we would expect that approximately 99 of them would generate sample means that fall within + or - 2.58 z scores of the population mean ($2,750 per semester), while 1% of the samples would generate means outside that range. Thus, choice C is the best answer.

Suppose We Wish to Test the Hypothesis That an Internship