Question

According to a recent survey by Smith Travel Research, the average daily rate for a luxury hotel in the United States is $237.22. Assume the daily rate follows a normal probability distribution with a standard deviation of $21.45.

What is the probability that a randomly selected luxury hotel’s daily rate will be

1. Less than $250 per night?

2. More than $260?

3. Between $210 and $240?

4. The managers of a local luxury hotel would like to set the hotel’s average daily rate at the 80th percentile, which is the rate below which 80% of hotels’ rates are set. What rate should they choose for their hotel?

5. The managers of a local luxury hotel consider a price as a signal of a prestige of the hotel and would like to set the hotel’s average daily rate not lower than 10% of the most expensive hotels. What rate should they choose for their hotel?

Answer 1