Homework: Chapters 8b&5 Save Score: 0.67 of 1 pt 13 of 20 (19 complete) HW Score

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Homework: Chapters 8b&5 Save Score: 0.67 of 1 pt 13 of 20 (19 complete) HW Score: 82.08%, 16.42 of 20 pts & Section 5.4 Exercise 16 Question Help The mean household income in a country in a recent year was about $75,878 and the standard deviation was about $84,000. (The median income was $56, 014.) a) If a Normal model was used for these incomes, whatwould be the household income of the top 1%? b) How confident should one be in the answer in part a? c) Why might the Normal model not be a good one for incomes? a)The income would be SLI (Round to the nearest dollar as needed.) ter your answer in the answer box and then click Check Answer

Explanation / Answer

mean salary =$75878

std dev =$84000

a)

if normal mode is considered,then

for top 1 %

z score can be calculated for X < 99%

then,0.99 = ( X - mean)/std dev

Z0.99 = (X - 75878)/84000

2.3263 = (X - 75878)/84000

x=2.3263*84000 + 75878

so, household income of top 1% = $ 271287

___________________________________________________

since std dev is 2.3263 away from mean ,it falls within 3 std dev away from mean,

one must be 99.7% confident

__________________________________________

c)normal mode might not be a good answer

because median salary is very low from mean salary

_________________________________________________________

please revert if any clarification required.

=$ 271287.2

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