Question

The mean cost of domestic airfares in the United States rose to an all-time high of $400 per ticket. Airfares were based on the total ticket value, which consisted of the price charged by the airlines plus any additional taxes and fees. Assume domestic airfares are normally distributed with a standard deviation of $120. Use Table 1 in Appendix B.

a. What is the probability that a domestic airfare is $555 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $260 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $300 and $500 (to 4 decimals)?

d. What is the cost for the 2% highest domestic airfares? (rounded to nearest dollar)

Answer 1

Given and .

a. The probability that a domestic airfare is $555 or more is:

b. The probability that a domestic airfare is $260 or less is:

c. The probability that a domestic airfare is between $300 and $500 is:

d. Let 2% highest domestic airfares lies above x. This means, 98% domestic airfares will lie below x.

Look into standard normal table for area closest to 0.9800, which is 0.9798 and corresponding z score is 2.05. Therefore, the z score for the cost for the 2% highest domestic airfares is .

The cost for the 2% highest domestic airfares is: