Introductory Econometrics: A Modern Approach 6th Edition by Jeffrey M Wooldridge

Exercise 2

Let X be a random variable distributed as Normal(5,4). Find the probabilities of the following events:

(i)P(X ? 6).

(ii)P(X? 4).

(iii)P(|X- 5| ? 1).

Step 1 of 4

Normal distribution explains the distribution of population around its mean and variance. It is defined as normal (mean, variance).

Thus normal (5, 4) denotes that the mean of distribution is 5 and standard deviation (square root of variance) is 2. The probability under normal distribution is calculated using below formula, here X represents observation value:

The value of probability can be obtained from probability table according to the Z value.