A 90% Confidence Interval for the Average Salary of All

question 59

Multiple Choice

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 ($130,852, $147,990) . To make more useful inferences from the data, it is desired to reduce the width of the confidence interval. Which of the following will result in a reduced interval width?

• A) Increase the sample size and decrease the confidence level.
• B) Decrease the sample size and decrease the confidence level.
• C) Increase the sample size and increase the confidence level.
• D) Decrease the sample size and increase the confidence level.

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Definitions:

Diseconomies of Scale

Diseconomies of scale occur when a company or business grows to such a point that the costs per unit increase, opposite of achieving cost efficiencies through expansion.

Specialization

The process of focusing effort and resources on a limited number of activities to increase efficiency and productivity.

Constant Returns to Scale

A situation in which increasing the amount of inputs in production results in a proportional increase in output.

Long-run Total Costs

The total costs incurred by a firm when all factors of production are variable, emphasizing the period where no costs are fixed.