Assume credit card balances are normally distributed with a mean of $2,870 and a

Question

Assume credit card balances are normally distributed with a mean of $2,870 and a standard deviation of $900 - assume these are population values. What is the probability of a randomly selected credit card holder has a credit card balance less than $2,S00? Use the standard normal table for this, using the population mean and standard deviation. Now you randomly select 50 credit card holders. What is the probability that their mean credit card balance is less than $2,500? Use the standard normal table for this, but this time use the population mean and standard error (standard deviation/SQRT(50)). Compare the probabilities from A and B above and discuss why they are different.

Explanation / Answer

Assume credit card balances are normally distributed with a mean of $2,870 and a

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