What significance level is used if management aims for a 98% confidence interval?

In a confidence interval, the significance level represents the probability that the confidence interval does not contain the true population parameter. It is calculated as 1 minus the confidence level.

When management aims for a 98% confidence interval, the confidence level is 0.98. To find the significance level, you calculate:

1 - 0.98 = 0.02

This means that there is a 2% risk that the interval does not include the true mean, which corresponds to a level of significance of 0.02. This aligns perfectly with the requirement of a 98% confidence level, indicating that the correct significance level is indeed 0.02. Thus, the choice that represents the correct significance level for a 98% confidence interval is accurately identified.