Problem Set-3 Solutions

Normal Distribution

Statistics for Business and Economics 6.8 to 6.25 Solutions:

8.

s = 10

70 80 90 100 110 120 130

9. a.

s =5

35 40 45 50 55 60 65

b. .683 since 45 and 55 are within plus or minus 1 standard deviation from the mean of 50 (Use the
table or see characteristic 7a of the normal distribution).

c. .954 since 40 and 60 are within plus or minus 2 standard deviations from the mean of 50 (Use the
table or see characteristic 7b of the normal distribution).

10.

-3 -2 -1 0 +1 +2 +3
Chapter 6

a. P(z  1.5) = .9332

b. P(z  1.0) = .8413

c. P(1  z  1.5) = P(z  1.5) - P(z < 1) = .9932 - .8413 = .0919

d. P(0 < z < 2.5) = P(z < 2.5) - P(z  0) = .9938 - .5000 = .4938

11. a. P(z  -1) = .1587

b. P(z ≥ -1) = 1 - P(z < -1) = 1 - .1587 = .8413

c. P(z ≥ -1.5) = 1 - P(z < -1.5) = 1 - .0668 = .9332

d. P(-2.5 ≤ z) = 1 - P(z < -2.5) = 1 - .0062 = .9938

e. P(-3 < z ≤ 0) = P(z ≤ 0) - P(z ≤ -3) = .5000 - .0013 = .4987

12. a. P(0 ≤ z ≤ .83) = .7967 - .5000 = .2967

b. P(-1.57 ≤ z ≤ 0) = .5000 - .0582 = .4418

c. P(z > .44) = 1 - .6700 = .3300

d. P(z ≥ -.23) = 1 - .4090 = .5910

e. P(z < 1.20) = .8849

f. P(z ≤ -.71) = .2389

13. a. P(-1.98  z  .49) = P(z  .49) - P(z < -1.98) = .6879 - .0239 = .6640

b. P(.52  z  1.22) = P(z  1.22) - P(z < .52) = .8888 - .6985 = .1903

c. P(-1.75  z  -1.04) = P(z  -1.04) - P(z < -1.75) = .1492 - .0401 = .1091

14. a. The z value corresponding to a cumulative probability of .9750 is z = 1.96.

b. The z value here also corresponds to a cumulative probability of .9750: z = 1.96.

c. The z value corresponding to a cumulative probability of .7291 is z = .61.

d. Area to the left of z is 1 - .1314 = .8686. So z = 1.12.

e. The z value corresponding to a cumulative probability of .6700 is z = .44.

f. The area to the left of z is .6700. So z = .44.

15. a. The z value corresponding to a cumulative probability of .2119 is z = -.80.

b. Compute .9030/2 = .4515; z corresponds to a cumulative probability of .5000 + .4515 = .9515. So z

= 1.66.
 Continuous Probability Distributions

c. Compute .2052/2 = .1026; z corresponds to a cumulative probability of .5000 + .1026 = .6026. So z

= .26.

d. The z value corresponding to a cumulative probability of .9948 is z = 2.56.

e. The area to the left of z is 1 - .6915 = .3085. So z = -.50.

16. a. The area to the left of z is 1 - .0100 = .9900. The z value in the table with a cumulative probability
closest to .9900 is z = 2.33.

b. The area to the left of z is .9750. So z = 1.96.

c. The area to the left of z is .9500. Since .9500 is exactly halfway between .9495 (z = 1.64) and
.9505(z = 1.65), we select z = 1.645. However, z = 1.64 or z = 1.65 are also acceptable answers.

d. The area to the left of z is .9000. So z = 1.28 is the closest z value.

17. Let x = debt amount

 = 15,015, s = 3540

18,000 − 15,015
a. z= = .84
3540

P(x > 18,000) = 1- P(z ≤ .84) = 1 - .7995 = .2005

10, 000 − 15, 015
b. z= = −1.42
3540

P(x < 10,000) = P(z < -1.42) = .0778

c. At 18,000, z = .84 from part (a)

12,000 − 15,015
At 12,000, z = = −.85
3540

P(12,000 < x < 18,000) = P(-.85 < z < .84) = .7995 - .1977 = .6018

14,000 − 15,015
d. z= = −.29
3540

P(x  14,000) = P(z  -.29) = .3859

18.  = 14.4 and s = 4.4

20 − 14.4
a. At x = 20, z = = 1.27
4.4

P(z  1.27) = .8980

P(x  20) = 1 - .8980 = .1020

Chapter 6

10 − 14.4
b. At x = 10, z = = −1.00
4.4

P(z ≤ -1.00) = .1587

So, P(x  10) = .1587

c. A z-value of 1.28 cuts off an area of approximately 10% in the upper tail.

x = 14.4 + 4.4(1.28) = 20.03

A return of 20.03% or higher will put a domestic stock fund in the top 10%
19.  = 328 and s = 92

x− 500 − 328

a. z= = = 1.87
s 92

P(x > 500) = P(z > 1.87) = 1 - P(z ≤ 1.87) = 1 - .9693 = .0307

The probability that the emergency room visit will cost more than $500 is .0307.

x− 250 − 328

b. z= = = −.85
s 92

P(x < 250) = P(z < -.85) = .1977

The probability that the emergency room visit will cost less than $250 is .1977.

x−400 − 328
c. For x = 400, z = = = .78
s 92
x −  300 − 328
For x = 300, z = = = −.30
s 92

P(300 < x < 400) = P(z < .78) - P(z < -.30) = .7823 - .3821 = .4002

The probability that the emergency room visit will cost between $300 and $400 is .4002.

d. The lower 8%, or area = .08, occurs for z = -1.41

x =  + zs = 328 – 1.41(92) = $198.28

For a patient to have a charge in the lower 8%, the cost of the visit must have been $198.28 or less.

20. a. United States:  = 3.73 s = .25

3.5 − 3.73
At x = 3.50, z = = −.92
.25

P(z < -.92) = .1788

So, P(x < 3.50) = .1788

b. Russia:  = 3.40 s = .20

 Continuous Probability Distributions

3.50 − 3.40
At x = 3.50, z = = .50
.20

P(z < .50) = .6915

So, P(x < 3.50) = .6915

69.15% of the gas stations in Russia charge less than $3.50 per gallon.

c. Use mean and standard deviation for Russia.

3.73 − 3.40
At x = 3.73, z = = 1.65
.20

P ( z  1.65) = 1 − P ( z  1.65) = 1 − .9505 = .0495

P( x  3.73) = .0495

The probability that a randomly selected gas station in Russia charges more than the mean price in
the United States is .0495. Stated another way, only 4.95% of the gas stations in Russia charge more
than the average price in the United States.

21. From the normal probability tables, a z-value of 2.05 cuts off an area of approximately .02 in the
upper tail of the distribution.

x =  + zs = 100 + 2.05(15) = 130.75

A score of 131 or better should qualify a person for membership in Mensa.

22. Use  = 8.35 and s = 2.5

a. We want to find P(5 ≤ x ≤10)

At x = 10,
x− 10 − 8.35
z= = = .66
s 2.5

At x = 5,
x− 5 − 8.35
z= = = −1.34
s 2.5

P(5 ≤ x ≤ 10) = P(-1.34 ≤ z ≤ .66)= P(z ≤ .66) - P(z ≤ -1.34)

= .7454 - .0901
= .6553

The probability of a household viewing television between 5 and 10 hours a day is .6553.

b. Find the z-value that cuts off an area of .03 in the upper tail. Using a cumulative probability of
Chapter 6

1 - .03 = .97, z = 1.88 provides an area of .03 in the upper tail of the normal distribution.

x =  + zs = 8.35 + 1.88(2.5) = 13.05 hours

A household must view slightly over 13 hours of television a day to be in the top 3% of television
viewing households.
x −  3 − 8.35
c. At x = 3, z = = = −2.14
s 2.5

P(x>3) = 1 - P(z< -2.14) = 1 - .0162 = .9838

The probability a household views more than 3 hours of television a day is .9838.

60 − 80
23. a. z= = −2 P(z ≤ -2) = .0228. So P(x < 60) = .0228
10

b. At x = 60
60 − 80
z= = −2 Area to left is .0228
10

At x = 75
75 − 80
z= = −.5 Area to left is .3085
10

P(60  x  75) = .3085 - .0228 = .2857

90 − 80
c. z= =1 P(z ≤ 1) = P(x ≤ 90) = .1587
10

Therefore 15.87% of students will not complete on time.

(60) (.1587) = 9.52

We would expect 9 or 10 students to be unable to complete the exam in time.

xi
24. a. x = = 200
n

( xi − x ) 2
s= = 26.04
n −1
We will use x as an estimate of  and s as an estimate of s in parts (b) - (d) below.

b. Remember the data are in thousands of shares.

At x = 180
180 − 200
z= = −.77
26.04
P(x  180) = P(z  -.77) = .2206

The probability trading volume will be less than 180 million shares is .2206.

c. At x = 230
 Continuous Probability Distributions

230 − 200
z= = 1.15
26.04

P(x > 230) = P(z > 1.15) = 1 - P(z  1.15) = 1 - .8749 = .1251

The probability trading volume will exceed 230 million shares is .1251.

d. A z-value of 1.645 cuts off an area of .05 in the upper tail

x =  + zs = 200 + 1.645(26.04) = 242.84

If the early morning trading volume exceeds 242.84 million shares, the day is among the busiest 5%.

25.  = 6.8, s = .6

8 − 6.8
a. At x = 8, z= = 2.00
.6

P(x > 8) = P(z > 2.0) = 1 - .9772 = .0228

6 − 6.8
b. At x = 6, z = = −1.33
.6

P(x  6) = P(z  -1.33) = .0918

9 − 6.8
c. At x = 9, z = = 3.67
.6

7 − 6.8
At x = 7, z = = .33
.6

P(7 < x < 9) = P(.33 < z < 3.67) = 1 - .6293 = .3707

Only 37.07 percent of the population gets the amount of sleep recommended by doctors. Most get
less.

Other Problems Solutions:

(1) 0.532807

(2) 132.8592, I used P (Z< 2.0537) = 0.98

(3)
i. 0.270563
ii. 0.218350

(4) 0.3439, I used P (Z< -2.3263) = 0.01

(5) 1223.2592, I used P (Z > 1.8808) = 0.03

(6) Approximately 56 months, I used P (Z< -2.3263) = 0.01

 Chapter 6

(7) 926 or more, I used P (Z< 0.8416) = 0.8

(8) 0.022750

(9) 6-footer club means the people having height 6 feet or more. P (X > 77 | X >72) =
0.023791

(10) Bound for a B grade is (70, 75). X~N (60, 10). P (70 < X < 75) = 0.091848 or 9.1848%

(11)
a) .0025
b) .8944
c) .3482