A study of the pay of corporate chief executive officers (CEOs)examined the increase in cash compensation of the CEOs of 103companies, adjusted for inflation, in a recent year. The meanincrease in real compensation was x = 7.7%, and thestandard deviation of the increases was s = 41%. Is thisgood evidence that the mean real compensation μ of allCEOs increased that year?

Ho:	μ = 0	(no increase)
Ha:	μ > 0	(an increase)

Because the sample size is large, the sample s is closeto the population σ, so take σ = 41%.

(a) Sketch the normal curve for the sampling distribution ofx when H_o is true. Shade the area thatrepresents the P-value for the observed outcome x= 7.7%. (Do this on paper. Your instructor may ask you to turn inthis work.)

(b) Calculate the P-value. (Round your answer to fourdecimal places.)


(c) Is the result significant at the α = 0.05 level? Doyou think the study gives strong evidence that the meancompensation of all CEOs went up?

Reject the null hypothesis, there is significant evidence thatthe mean compensation of all CEOs went up.

Reject the null hypothesis, there is not significant evidencethat the mean compensation of all CEOs wentup.    

Fail to reject the null hypothesis, there is not significantevidence that the mean compensation of all CEOs went up.

Fail to reject the null hypothesis, there is significantevidence that the mean compensation of all CEOs went up.