our insurance company has converged for three types of cars. The annual cost for

Question

our insurance company has converged for three types of cars. The annual cost for each type of cars can be modeled using Gaussian (Normal) distribution, with the following parameters: (Discussions allowed!) Car type 1 Mean=$520 and Standard Deviation=$110 Car type 2 Mean=$720 and Standard Deviation=$170 Car type 3 Mean=$470 and Standard Deviation=$80 Use Random number generator and simulate 1000 long columns, for each of the three cases. Example: for the Car type 1, use Number of variables=1, Number of random numbers=1000, Distribution=Normal, Mean=520 and Standard deviation=110, and leave random Seed empty. Next: use either sorting to construct the appropriate histogram or rule of thumb to answer the questions: 13. What is approximate probability that Car Type 3 has annual cost less than $550? a. Between 1% and 3% b. Between 27% and 39% c. Between 75% and 90% d. None of these 14. Which of the three types of cars is most likely to cost less than $400? a. Type 1 b. Type 2 c. Type 3 15. For which of the three types we have the highest probability that it will cost between $500 and $700? a. Type 1 b. Type 2 c. Type 3

Explanation / Answer

a) What is approximate probability that Car Type 3 has annual cost less than $550?

p(X<550)=

p(x-470/(80/sqrt(1000)<31.62)

=1

Hence answer d. None of these

. Which of the three types of cars is most likely to cost less than $400?

b. Type 2 =

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