The U.S. Bureau of Labour Statistics reports that the average annual expenditure on food and drink for all families is $5700 (Money, Dec 2003). Assume that the annual expenditures on food and drink are normally distributed and that the standard deviation is $1500.
a. What is the range of expenditures of the 10% of families with the lowest spending on food and drink?
b. What percentage of families spends more than $7000 annually on food and drink?
c. What is the range of expenditures for the 5% of families with the highest annual spending on food and drink?
The solution illustrates the use of normal distribution.