Assignment-7- Paired Samples Case

1- A USA Today editorial addressed the growth of compensation for corporate

CEOs. Quoting a study made by BusinessWeek, USA Today indicated that the pay
packages for CEOs have increased almost sevenfold on average from 1994 to 2004.
The file entitled CEODough contains the salaries of CEOs in 1994 and in 2004,
adjusted for inflation.
a. Determine the ratio of the average salary for 1994 and 2004. Does it appear that
BusinessWeek was correct? Explain your answer.
b. Examine the sample standard deviations. What do these suggest is the
relationship between the two population standard deviations? Support your
assertion.
c. Based on your response to part b, conduct a test of hypothesis to determine if
the difference in the average CEO salary between 1994 and 2004 is more than $9.8
million. Use a p-value approach with a significance level of 0.025.

2- Suppose a professional job-placement firm that monitors salaries in professional

fields is interested in determining if the fluctuating price of oil and the outsourcing
of computer-related jobs have had an effect on the starting salaries of chemical and
electrical engineering graduates. Specifically, the job-placement firm would like to
know if the 2007 average starting salary for chemical engineering majors is higher
than the 2007 average starting salary for electrical engineering majors. To conduct
its test, the job placement firm has selected a random sample of 124 electrical
engineering majors and 110 chemical engineering majors who graduated and
received jobs in 2007. Each graduate was asked to report his or her starting salary.
The results of the survey are contained in the file Starting Salaries.

a. Conduct a hypothesis test to determine whether the mean starting salary for
2007 graduates in chemical engineering is higher than the mean starting salary for
2007 graduates in electrical engineering. Conduct the test at the 0.05 level of
significance. Be sure to state a conclusion. (Assume that the firm believes the two
populations from which the samples were taken are approximately normally
distributed with equal variances.)

b. Suppose the job-placement firm is unwilling to assume that the two populations
are normally distributed with equal variances. Conduct the appropriate hypothesis
test to determine whether a difference exists between the mean starting salaries
for the two groups. Use a level of significance of 0.05. What conclusion should the
job-placement firm reach based on the hypothesis test?