Question

A business executive, transferred from Chicago to Atlanta, needs to sell her house in Chicago quickly. From conversations with her realtor, the executive believes the price she will get by leaving the house on the market for another month is uniformly distributed between $204,000 and $233,000. If she leaves the house on the market for another month, what will be the standard deviation of the price she will get

Answer 1

Answer:

The standard deviation of the price she will get is $8,371.58.

Step-by-step explanation:

An uniform probability is a case of probability in which each outcome is equally as likely.

For this situation, we have a lower limit of the distribution that we call a and an upper limit that we call b.

The variance of the uniform distribution is given by:

$V = \frac{(b-a)^{2}}{12}$

The standard deviation is the square root of the variance.

Uniformly distributed between $204,000 and $233,000

This means that $a = 204000, b = 233000$

So

$V = \frac{(b-a)^{2}}{12} = \frac{(233000 - 204000)^{2}}{12} = 70,083,333.33$

The standard deviation is the square root of the variance. So

$S = \sqrt{70,083,333.33} = 8,371.58$

The standard deviation of the price she will get is $8,371.58.