Question

If the average price of a new one-family home is $246,300 with a standard deviation of $15,000, find the minimum and maximum prices of the houses that a contractor will build to satisfy the middle 60% of the market. Assume that the variable is normally distributed.

Answer 1

Answer:

Step-by-step explanation:

P(-a<z<a)=0.60, from the symmetry of normal distribution, P(z<a) = 0.60+ (1-0.60)/2 =

0.60+0.4/2

0.60+0.2

= 0.8

Considering the standard normal distribution table, we have a = 0.80, thus

z =(x-m)/std = 0.80

the maximum x = m + 0.80×std =

Where m = 246300

Std = 15000

246300+0.80×15000

= 246300+12000

= 258300

For the minimum x

x = m - 0.80×std

x = 246300-0.80×15000

246300-12000

= 234300