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 99% confidence interval for the mean was calculated to be ($2,181,260, $5,836,180). What would happen to the confidence interval
if the confidence level were changed to 98%?
A) The interval would get wider.
B) There would be no change in the width of the interval.
C) It is impossible to tell until the 98% interval is constructed.
D) The interval would get narrower.

Question

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 99% confidence interval for the mean was calculated to be ($2,181,260, $5,836,180). What would happen to the confidence interval 
if the confidence level were changed to 98%?
A) The interval would get wider.
B) There would be no change in the width of the interval.
C) It is impossible to tell until the 98% interval is constructed.
D) The interval would get narrower.

Quizplus · Accepted Answer

A lower confidence level (98% compared to 99%) results in a narrower confidence interval because there is less certainty required, which reduces the margin of error.

A Marketing Research Company Is Estimating the Average Total Compensation