Suppose the Internal Revenue Service reported that the mean tax refund for the year 2016 was $2,800. Assume the standard deviation is $450 and that the amounts refunded follow a normal probability distribution. What percent of the refunds are more than $3,100? What percent of the refunds are more than $3,100 but less than $3,500? What percent of the refunds are more than $2,250 but less than $3,500?
Continuous Probability Distributions
Probability distributions are of two types, which are continuous probability distributions and discrete probability distributions. A continuous probability distribution contains an infinite number of values. For example, if time is infinite: you could count from 0 to a trillion seconds, billion seconds, so on indefinitely. A discrete probability distribution consists of only a countable set of possible values.
Normal Distribution
Suppose we had to design a bathroom weighing scale, how would we decide what should be the range of the weighing machine? Would we take the highest recorded human weight in history and use that as the upper limit for our weighing scale? This may not be a great idea as the sensitivity of the scale would get reduced if the range is too large. At the same time, if we keep the upper limit too low, it may not be usable for a large percentage of the population!
Suppose the Internal Revenue Service reported that the
What percent of the refunds are more than $3,100?
What percent of the refunds are more than $3,100 but less than $3,500?
What percent of the refunds are more than $2,250 but less than $3,500?
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