6.137 CEO pay. A study of the pay of corporate chief executive officers (CEOs) examined the increase in cash compensation of the CEOs of 104 companies, adjusted for inflation, in a recent year. The mean increase in real compensation was %, and the standard deviation of the increases was s = 55 %. Is this good evidence that the mean real compensation μ of all CEOs increased that year? The hypotheses are

H₀: μ = 0 (no increase)

H_a: μ > 0 (an increase)

Because the sample size is large, the sample s is close to the population σ, so take σ = 55 %.

1. (a) Sketch the Normal curve for the sampling distribution of when H₀ is true. Shade the area that represents the P-value for the observed outcome %.

2. (b) Calculate the P-value.

3. (c) Is the result significant at the α = 0.05 level? Do you think the study gives strong evidence that the mean compensation of all CEOs went up?