Question

A construction company in Naples, Florida, is struggling to sell condominiums. In order to attract buyers, the company has made numerous price reductions and better financing offers. Although condominiums were once listed for $300,000, the company believes that it will be able to get an average sale price of $191,000. Let the price of these condominiums in the next quarter be normally distributed with a standard deviation of $17,000. [You may find it useful to reference the z table.] a. What is the probability that the condominium will sell at a price (i) Below $175,000?, (ii) Above $218,000?

Answer 1

Solution :

Given that ,

mean = = 191000

standard deviation = =17000

P(X<175000 ) = P[(X- ) / < (175000-191000) / 17000]

= P(z < -0.94)

Using z table

probability= 0.1736

ii)

Solution :

Given that ,

mean = = 191000

standard deviation = =17000

P(X>218000 ) = 1 - P[(X- ) / < (218000-191000) / 17000]

= P(z < 1.59)

Using z table

probability= 0.9441