Question

A 90% confidence interval for the average salary of all CEOs in the electronics industry was constructed using the results of a random survey of 45 CEOs. The interval was ($139,048, $154,144). Give a practical interpretation of the interval.

a) 90% of the sampled CEOs have salaries that fell in the interval $139,048 to $154,144b) We are 90% confident that the mean salary of all CEOs in the electronics industry falls in the interval $139,048 to $154,144. c) 90% of all CEOs in the electronics industry have salaries that fall between $139,048 to $154,144d) We are 90% confident that the mean salary of the sampled CEOs falls in the interval $139,048 to $154,144.

Answer 1

b) We are 90% confident that the mean salary of all CEOs in the electronics industry falls in the interval $139,048 to $154,144.

Explanation:

Confidence interval:

Confidence level of x%

We build from a sample.

Between a and b.

Intepretation: We are x% sure that the population mean is between a and b.

In this question:

90%

45 CEO's

Between ($139,048, $154,144).

So

We are 90% sure that the mean salary of all CEO's falls within this interval.

The correct answer is:

b) We are 90% confident that the mean salary of all CEOs in the electronics industry falls in the interval $139,048 to $154,144.