Question

Information for Questions 5-7: The Annual Survey of Colleges in the U.S. also reports on the average amount of student loan debt by state. The most recent data by state showed an approximately normal shape with a minimum average amount of
$19,000
and a maximum average amount of
$38,000
. Use the minimum and maximum value and the normal shape to estimate the mean and standard deviation of the data for the 50 states. (Mean and standard deviation have been rounded to the nearest
$100
.) a. mean
=$25,000;
standard deviation
=$3,500
b. mean
=$26,800;
standard deviation
=$2,100
c. mean
=$26,800;
standard deviation
=$3,700
d. mean
=$28.500;
standard deviation
=$1,800
e. mean
=$28,500;
standard deviation
=$3,200
A federal study of student loan debt plans to focus on those states with the highest amounts of student loan debt. The study plans on targeting those states that fall in the top
2.5%
in terms of average student loan amounts. What is the cutoff point that would place a state in the top
2.5%
based on student loan debt? (Use the mean and standard deviation estimates from Question #5.) a.
$38,100
b.
$34,900
c.
$31,700
d.
$32,500
e.
$22,100

Answer 1

The correct answer is $34900.

X : Average amount of loan of student debt by state .

X = N ( μ = $28500 , σ² = ( 3200 )² )

To find : What is the cutoff point that would place a state in top 2.5%

Let it be X

P( X > x ) = 0.025

P(X-μ/σ > X - 28500/3200) = 0.025

P(z >Z ) = 0.025

1 - P(z<Z ) = 0.025

P(z<Z ) = 0.975

φ(z) = 0.975

Z = φ⁻¹(0.975)

X - 28500/3200 = 1.96

X = 34772

i.e; P(X > 34772) = 0.025

Since, it is nearly equal to $34900 option b is correct.

To learn more about cutoff point click here:

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