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Hypothesis Testing

Public service managers complain that their salaries are falling behind those of their counterparts in the private sector. To make a strong case for his employees, the Deputy Minister of Finance has produced a document for the Minister's consideration. The document compares the average salary of ten highly placed managers with those of their counterparts in the private sector. The table below summarizes the result, giving financial amounts in thousands of dollars.

Item Government Private Sector

Mean Salary $70.90 $99.50
Std. Deviation $11.88 $17.48
Sample Size 10 10

At a 0.05 level of significance, can you justify the Deputy's claim that the average salary of a public sector manager is lower than that of his or her counterpart in the private sector?

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Solution Summary

The hypothesis that the average salary of a public sector manager is lower than that of his or her counterpart in the private sector is tested.

$2.19