The preventable monthly loss at a company has a normal distribution with a mean of $7800 standard deviation of $30. A new policy was put into place, and the preventable loss the next month was $7620. What inference can you make about the new policy?
A) The new policy is probably less effective than the one it replaced.
B) Because the probability that the monthly loss would be as low as $7620 is small, the new policy is working.
C) Because the probability that the monthly loss would be as low as $7620 is not very small, the new policy is not working.
D) While the probability that the monthly loss would be as low as $7620 is small, it is not unexpected.

Question

Quizplus · Accepted Answer

The preventable loss of $7620 is lower than the mean of $7800, and given the standard deviation of $30, this is more than 6 standard deviations below the mean, which is a rare event in a normal distribution, suggesting the new policy is effective.

The Preventable Monthly Loss at a Company Has a Normal