Question

Annual starting salaries for college graduates with degrees in business administration are generally expected to be between $30,000 and $45,000. Assume that a 95% confidence interval estimate of the population mean annual starting salary is desired. a.What is the planning value for the population standard deviation?

Answer 1

The estimated value for the population standard deviation is $3,750.

Explanation:

The interval within which the annual starting salaries for college graduates with degrees in business administration are generally expected to be is $30,000 and $45,000.

The standard deviation is the measure of dispersion or spread. And so is the range of the data.

Both the measures are used to determine how spread out the data is from the mean.

The relationship between standard deviation and range is not defined but according to the rule of thumb the standard deviation is one-fourth of the range of the data.

The formula of range is:

`Range=Maximum-Minimum`

Compute the range of the data of starting salaries of college graduates with degrees in business administration as follows:

`Range=Maximum-Minimum\\=45000-30000\\=15000`

The range of the data is, $15,000.

Compute the estimated value of the standard deviation as follows:

`SD=(Range)/(4)=(15000)/(4)=3750`

Thus, the estimated value for the population standard deviation is $3,750.