Question

Are America's top chief executive officers (CEO's) really worth all that money? One way to answer this question is to look at row B, the annual company percentage incease in revenue, versus row A, the CEO's annual percentage salary increase in that same company. A random sample of companies such as John Deere & Co., General Electric, Union Carbide, and Dow Chemical yielded the following data:

B: Percent increase for company	24	23	25	18	6	4	21	37
A: Percent increase for CEO	21	25	20	14	-4	19	15	30

Do these data indicate that the population mean percentage increase in corporative revenue (row B) is different from the population mean percentage increase in CEO salary? Use a 5% level of significance.

a) what is the level of significance? State the null and alternative hypotheses. Will you use a left, right or two tailed test?

b) what sampling distribution will you use? what assumptions are you making? compute the value of the sample test statistic. (answer should be: student's t, d.f.=7, d=2.25, t=0.818.)

c) find the P-value. Sketch the sampling distribution and show the area corresponding to the P-value. (answer should be: 0.250<P-value<0.500 on t graph, shade area to the left of -0.818 and to the right of 0.818. From TI-84, P-value=0.4402.)

d) based on your answers in parts a-c will you reject or fail to reject the null hypothesis? are the data statistically significant at the level of significance?

e) your conclusion.

Please show all work.

Answer 1