Question

In 2009, the average starting salary for an individual right out of college with a bachelor’s degree in business was $51,620 per year. Suppose a 2014 study, which randomly sampled 74 individuals right out of college with a bachelor’s degree in business, showed an average starting salary of $49,400. Assume the population standard deviation is $8,710. Does the 2014 study indicate that the average starting salary of an individual right out of college with a bachelor’s degree in business is now lower at α=.005?

For the 98% confidence interval, find the lower (i.e., left) endpoint.

Answer 1

Test statistic,
z = (49400 - 51620)/(8710/sqrt(74))
z = -2.1926

p-value = 0.0142

As p-value is less than the significance level of 0.05, reject H0
There are significant evidence to conclude that the mean is less

98% CI
z- value = 2.33
CI = (49400 - 2.33*8710/sqrt(74), 49400 + 2.33*8710/sqrt(74))
= (47040.8355, 51759.1645)

lower endpoint = 47040.8355