Question

According to the National Association of Colleges and Employers, the average starting salary for new college graduates in health sciences is $51,541. The average starting salary for new college graduates in business is $53,901 (National Association of Colleges and Employers website, January 5, 2015). Assume that starting salaries are normally distributed and that the standard deviation for starting salaries for new college graduates in health sciences is $11,000. Assume that the standard deviation for starting salaries for new college graduates in business $15,000.a. What is the probability that a new college graduate in business will earn a starting salary of at least $65,000?b. What is the probability that a new college graduate in health sciences will earn a starting salary of at least $65,000?c. What is the probability that a new college graduate in health sciences will earn a starting salary less than $40,000?d. How much would a new college graduate in business have to earn in order to have a starting salary higher than 99% of all starting salaries of new college graduates in the health sciences?

Answer 1

Answer:

a) The probability that a new college graduate in business will earn a starting salary of at least $65,000 is P=0.22965 or 23%.

b) The probability that a new college graduate in health sciences will earn a starting salary of at least $65,000 is P=0.11123 or 11%.

c) The probability that a new college graduate in health sciences will earn a starting salary of less than $40,000 is P=0.14686 or 15%.

d) A new college graduate in business have to earn at least $77,133 in order to have a starting salary higher than 99% of all starting salaries of new college graduates in the health sciences.

Step-by-step explanation:

a. What is the probability that a new college graduate in business will earn a starting salary of at least $65,000?

For college graduates in business, the salary distributes normally with mean salary of $53,901 and standard deviation of $15,000.

To calculate the probability of earning at least $65,000, we can calculate the z-value:

$z=\frac{x-\mu}{\sigma} =\frac{65000-53901}{15000} =0.74$

The probability is then

$P(X>65,000)=P(z>0.74)=0.22965$

The probability that a new college graduate in business will earn a starting salary of at least $65,000 is P=0.22965 or 23%.

b. What is the probability that a new college graduate in health sciences will earn a starting salary of at least $65,000?

For college graduates in health sciences, the salary distributes normally with mean salary of $51,541 and standard deviation of $11,000.

To calculate the probability of earning at least $65,000, we can calculate the z-value:

$z=\frac{x-\mu}{\sigma} =\frac{65000-51541}{11000} =1.22$

The probability is then

$P(X>65,000)=P(z>1.22)=0.11123$

The probability that a new college graduate in health sciences will earn a starting salary of at least $65,000 is P=0.11123 or 11%.

c. What is the probability that a new college graduate in health sciences will earn a starting salary less than $40,000?

To calculate the probability of earning less than $40,000, we can calculate the z-value:

$z=\frac{x-\mu}{\sigma} =\frac{40000-51541}{11000} =-1.05$

The probability is then

$P(X$

The probability that a new college graduate in health sciences will earn a starting salary of less than $40,000 is P=0.14686 or 15%.

d. How much would a new college graduate in business have to earn in order to have a starting salary higher than 99% of all starting salaries of new college graduates in the health sciences?

The z-value for the 1% higher salaries (P>0.99) is z=2.3265.

The cut-off salary for this z-value can be calculated as:

$X=\mu+z*\sigma=51,541+2.3265*11,000=51,541+25,592=77,133$

A new college graduate in business have to earn at least $77,133 in order to have a starting salary higher than 99% of all starting salaries of new college graduates in the health sciences.