Annual salary plus bonus data for chief executive officers are presented in the businessWeek Annual Pay Survey. A preliminary sample showed that the standard deviation is $675with data provided in thousands of dollars. How many chief executive officers should bein a sample if we want to estimate the population mean annual salary plus bonus with amargin of error of $100,000? (Note: The desired margin of error would be E = 100 if thedata are in thousands of dollars.) Use 95% confidence.
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
Annual salary plus bonus data for chief executive officers are presented in the businessWeek Annual Pay Survey. A preliminary sample showed that the standard deviation is $675
with data provided in thousands of dollars. How many chief executive officers should be
in a sample if we want to estimate the population mean annual salary plus bonus with a
margin of error of $100,000? (Note: The desired margin of error would be E = 100 if the
data are in thousands of dollars.) Use 95% confidence.
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