Question: The IRS would like to determine the mean income that waiters fail to report on their income tax. A random sample of 121 waiters is selected, and very detailed and accurate records are kept of their actual incomes by IRS agents. In this sample, the mean amount of unreported income is $5296 and the sample standard deviation is $1592. The IRS would like to be very that they are correct and have asked you to calculate a 98% confidence interval of the population mean of waiters’ unreported incomes.

a) What is the best estimator for the population mean?

b) Exactly how is the estimator distributed in this sample?

c) Construct the Confidence Interval required by the IRS.