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 $115. Use Table 1 in Appendix B.

a. What is the probability that a domestic airfare is $560 or more (to 4 decimals)?

b. What is the probability that a domestic airfare is $245 or less (to 4 decimals)?

c. What if the probability that a domestic airfare is between $310 and $500 (to 4 decimals)?

d. What is the cost for the 5% highest domestic airfares? (rounded to nearest dollar)
$ or - Select your answer -morelessItem 5

Answer 1

Let ,

a) Now ,

; From standard normal probability table

Therefore , the probability that a domestic airfare is $560 or more is 0.0823

b) Now ,

; From standard normal probability table

Therefore , the probability that a domestic airfare is $245 or less is 0.0885

c) Now ,

; From standard normal probability table

Therefore , the probability that a domestic airfare is between $310 and $500 is 0.2863

d) Now ,

........(I)

Also from standard normal probability table ,

............(II)

From (I) and (II) , we get ,

Therefore , the $589 be the cost for the 5% highest domestic airfares.