Before a new phone system was installed, the amount a company spent on personal calls followed a normal distribution with an average of $700 per month and a standard deviation of $50 per month. Refer to such expenses as PCE's (personal call expenses). Find the point in the distribution
Below which 2.5% of the PCE's fell.
A) $17.50
B) $682.50
C) $798.00
D) $602.00

Question

Quizplus · Accepted Answer

To find the point below which 2.5% of the PCE's fell, we need to find the z-score that corresponds to the 2.5th percentile, which is approximately -1.96. Using the formula: X = μ + zσ, where μ = $700 and σ = $50, we get X = 700 + (-1.96)(50) = $602.00.

Before a New Phone System Was Installed, the Amount a Company