A construction company in Naples, Florida, is struggling to sell condominiums. In order to attract buyers, the company has made
numerous price reductions and better financing offers. Although condominiums were once listed for $300,000, the company believes that it will be able to get an average sale price of $210,000. Let the price of these condominiums in the next quarter be normally distributed with a standard deviation of $15,000. a) What is the probability that the condominium will sell at a price (i) below $200,000?, (ii) above $240,000?
In this case we can use a normal distribution calculator. Setting the mean as 210000 and the standard deviation as 15000, we find that the area below 200000 is 0.2525. So the probability that the condominium will sell at $200.000 is 25.25%.
The area above 240000 is 0.0228, so the probability that the condominium will sell at $240.000 is 2.28%
