Which of the Following Is True About Probability Density Functions

question 12

Multiple Choice

Which of the following is true about probability density functions?

• A) A graph of the density function must lie at or below the x-axis.
• B) The total area under the density function below the x-axis is 2.0.
• C) It calculates the probability of a random variable lying within a certain interval.
• D) P (a) x P (b) is the area under the density function between two numbers a and b.

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Definitions:

Efficient

Describes a process that achieves its goals with the least waste of time and effort.

Lump-Sum Tax

A tax that is the same amount for every person.

Deadweight Loss

A cost to society created by market inefficiency, which occurs when supply and demand are out of equilibrium.

Ability-To-Pay Principle

A principle in taxation that holds that taxes should be levied according to an individual's or entity's capacity to pay.