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Question
The annual salaries of employees in a large company are approximately normally distributed with a mean of $50,000 and a standard deviation of $20,000. What percent of people earn between $45,000 and $65,000?
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Solution
Let x denotes the annual salaries of employees in a large company
Mean µ = 50,000 and S.D σ = 20,000
Standard normal variate z = `(x - mu)/sigma`
P(people ear between $45,000 and $65,000)
P(45000 < x < 65000)
When x = 45,000
z = `(45, 000 - 50, 000)/(20, 000)`
= `(-5000)/(20, 000)`
= `(-1)/4`
z = – 0.25
When x = 65,000
z = `(5, 000 - 50, 000)/(20,000)`
= `(15000)/(20, 000)`
= `3/4`
z = 0.75
P(45000 < x < 65000) = P(– 0.25 < z < 0.75)
= P(– 0.25 < z < 0) + P(0 < z < 0.75)
= p(0 < z < 0.25) + P(0 < z < 0.75)
= P(0 < z < 0.25) + P(0 < z < 0.75)
= 0.0987 + 0.2734
= 0.3721
P(45000 < x < 65000) in percentage
= 0.3721 × 100
= 37.21
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