Suppose Mountanias government now reports that its population mean disposable household income is $900 per month, with
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Question:
Suppose Mountania’s government now reports that its population mean disposable household income is $900 per month, with a standard deviation of $100. Deserita’s population mean is $1,000, with a standard deviation of $300.
a. Which country has more variation in income? Explain using popular phrases, such as “gap between rich and poor.”
b. Each country defines the poverty level to be $750. If you assume that income has a normal distribution, find the probability that a household’s income is below the poverty level in
i. Desertia
ii. Mountania
Does it seem reasonable to assume a normal distribution? Is income symmetric or skewed?
Related Book For
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson
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