It is desired to estimate the average total compensation of CEOs in the Service industry.Data were randomly collected from 18 CEOs and the 95% confidence interval was calculated to be ($2,181,260,$5,836,180).
-Based on the interval above,do you believe the average total compensation of CEOs in the Service industry is more than $3,000,000?
A) I am 95% confident that the average compensation is $3,000,000.
B) Yes, and I am 95% confident of it.
C) Yes, and I am 75% confident of it.
D) I cannot conclude that the average exceeds $3,000,000 at the 95% confidence level.

Question

Quizplus · Accepted Answer

The confidence interval ($2,181,260, $5,836,180) does not include the value $3,000,000 which means that we cannot conclude with 95% confidence that the average total compensation of CEOs in the Service industry is more than $3,000,000. Therefore, option D is the correct answer.

It Is Desired to Estimate the Average Total Compensation of CEOs