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) Yes, and I am 95% confident of it.
B) Yes, and I am 78% confident of it.
C) I am 95% confident that the average compensation is $3,000,000.
D) I cannot conclude that the average exceeds $3,000,000 at the 95% confidence level.

Question

Quizplus · Accepted Answer

The confidence interval includes values both below and above $3,000,000, so we cannot be 95% confident that the average exceeds $3,000,000.

It Is Desired to Estimate the Average Total Compensation of CEOs