A multinational company wants to know the cost of insuring its employees for a year. A recent study by the human resource director shows the annual insurance expenses per employee per year followed the normal probability distribution, with a mean of Rp10,896,000 and a standard deviation of Rp5 million per year. a) What is the probability that annual insurance expenses are more than Rp15 million? b) What is the probability that annual insurance expenses are between Rp12 million and Rp15 million? c) What are the lower and upper values of X, symmetrically distributed around the mean, that includes 90% of annual insurance expenses?
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!
A multinational company wants to know the cost of insuring its employees for a year. A recent study by the human resource director shows the annual insurance expenses per employee per year followed the
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a) What is the probability that annual insurance expenses are more than Rp15 million?
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b) What is the probability that annual insurance expenses are between Rp12 million and Rp15 million?
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c) What are the lower and upper values of X, symmetrically distributed around the mean, that includes 90% of annual insurance expenses?
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