consider the distribution of monthly social security (OASDI) payments. Assume a normal distribution with a standard deviation of $116. if one-fourth of payments are above $1214,87 what is the mean monthly payment?

$1137

Step-by-step explanation:

Solution:-

We will define the random variable as follows:

                       X: Monthly social security (OASDI) payments

The random variable ( X ) is assumed to be normally distributed. This implies that most monthly payments are clustered around the mean value ( μ ) and the spread of payments value is defined by standard deviation ( σ ).

The normal distribution is defined by two parameters mean ( μ ) and standard deviation ( σ ) as follows:

                       X ~ Norm ( μ , σ^2 )

We will define the normal distribution for (OASDI) payments as follows:

                       X ~ Norm ( μ , 116^2 )

We are to determine the mean value of the distribution by considering the area under neat the normal distribution curve as the probability of occurrence. We are given that 1/4 th of payments lie above the value of $1214.87. We can express this as:

                      P ( X > 1214.87 ) = 0.25

We need to standardize the limiting value of x = $1214.87 by determining the Z-score corresponding to ( greater than ) probability of 0.25.

Using standard normal tables, determine the Z-score value corresponding to:

                     P ( Z > z-score ) = 0.25 OR P ( Z < z-score ) = 0.75

                     z-score = 0.675

- Now use the standardizing formula as follows:

The mean value is $1137

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step-by-step explanation: