The Bureau of Labor Statistics generally uses 90% confidence levels in its repor

Question

The Bureau of Labor Statistics generally uses 90% confidence levels in its reports. One report gives a 90% confidence interval for the mean hourly earnings of American workers in2000 as $15.49 to $16.11. If the null hypothesis states that the mean hourly earnings of all workers in 2000 was $16.15, would this hypothesis be rejected in a two-tailed test if a = .10?What about a null hypothesis stating that the mean was $15.50? Explain your reasoning.(You should not need to do a significance test to answer this question.)

Explanation / Answer

Here, the value 16.15 is over and above the maximum limit given in the range, hence reject the null hypothesis. However, in the later case, the mean is falling in the range, so we cannot reject the null hypothesis.

Say for example, a coke bottling plant said that the quantity of coke in a 500 ml bottle, ranges between 499 to 501 with 90% confidence. Then any value given in this range cannot be rejected because at 90% confidence, that value can be true. But any value given outside this range can be rejected.

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