1. Proﬁts of an industry consisting of 100 ﬁrms are normally distributed with a mean of $1.5 &n

1. Proﬁts of an industry consisting of 100 ﬁrms are normally distributed with a mean

of $1.5 million and a standard deviation of $120,000. Calculate:

(a) (5 points) P (X < $1 million)

Now suppose a random sample of 10 ﬁrms gave a mean proﬁt of $900,000 and a sample standard deviation of of $100,000.

(b) Establish a 95% conﬁdence interval for the true mean proﬁt for the industry.

(c) Using the test of signiﬁcance approach, will you reject or fail to reject the hypothesis that the true mean is $1.5 million? Please show your work.

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Expert Solution

Rahul Sunny answered 1 year ago

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