Question

According to the Insurance Institute of America, a family of four spends between $400 and $3,800 per year on all types of insurance. Suppose the money spent is uniformly distributed between these amounts. If we select a family at random, what is the probability they spend less than $2,000 per year on insurance per year? (Round your answer to 4 decimal places.)

Answer 1

0.471

Explanation:

Calculation for the probability that they spend less than $2,000 per year on insurance per year

First step is to find the base

Base =$2,000-$400

=$1,600

Second step is to find the probability using this formula

P=1/b+a×base

Where,

b represents $3,800

a represents $400

base represents $1,600

Let plug in the formula

P=1/$3,800-$400×$1,600

Hence,

P=1×$1,600/$3,800-$400

P=$1,600/$3,400

P=0.471

Therefore the probability that they spend less than $2,000 per year on insurance per year will be 0.471