Business Week conducted a survey of graduates from 30 top MBA programs. On the basis of the survey, assume that the mean annual salary for male and female graduates 10 years after graduation is $168,000 and $117,000, respectively. Assume the standard deviation for the male graduates is $40,000 and for the female graduates it is $25,000. 1. In which of the preceding two cases, part a or part b, do we have a higher probability of obtaining a smaple estimate within $10,000 of the population mean? why? 2. What is the probability that a simple random sample of 100 male graduates will provide a sample mean more than $4,000 below the population mean?

1. Due to the lower standard deviation, it is more likely to obtain a sample of females within $10,000 of the population mean

2. 15.87% probability that a simple random sample of 100 male graduates will provide a sample mean more than $4,000 below the population mean

Step-by-step explanation:

To solve this question, we need to understand the normal probability distribution and the central limit theorem.

Normal probability distribution

When the distribution is normal, we use the z-score formula.

In a set with mean and standard deviation , the zscore of a measure X is given by:

The Z-score measures how many standard deviations the measure is from the mean. After finding the Z-score, we look at the z-score table and find the p-value associated with this z-score. This p-value is the probability that the value of the measure is smaller than X, that is, the percentile of X. Subtracting 1 by the pvalue, we get the probability that the value of the measure is greater than X.

Central Limit Theorem

The Central Limit Theorem estabilishes that, for a normally distributed random variable X, with mean and standard deviation , the sampling distribution of the sample means with size n can be approximated to a normal distribution with mean and standard deviation .

For a skewed variable, the Central Limit Theorem can also be applied, as long as n is at least 30.

1. In which of the preceding two cases, part a or part b, do we have a higher probability of obtaining a smaple estimate within $10,000 of the population mean? why?

The lower the standard deviation, the less dispersed the values are, meaning it is more likely to find values within a certain threshold of the mean.

So

Due to the lower standard deviation, it is more likely to obtain a sample of females within $10,000 of the population mean.

2. What is the probability that a simple random sample of 100 male graduates will provide a sample mean more than $4,000 below the population mean?

We have that:

This probability is the pvalue of Z when X = 168000 - 4000 = 164000. So

By the Central Limit Theorem

has a pvalue of 0.1587

15.87% probability that a simple random sample of 100 male graduates will provide a sample mean more than $4,000 below the population mean