Even Though the Normal Probability Distribution Deals with Continuous Variables

question 113

Multiple Choice

Even though the normal probability distribution deals with continuous variables, under certain circumstances we can use it to approximate various discrete probability distributions. Under which of these conditions is the use of the normal probability distribution permissible?

• A) in the case of binomial probabilities, when np > 5 and also nq > 5
• B) in the case of Poisson probabilities, when> 100
• C) in the case of hypergeometric probabilities, when np > 1 and also nq > 1

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Definitions:

Fixed Costs

Expenses that do not change with the level of output or sales in the short term.

Marginal Cost Curve

Graphical representation showing how the cost to produce one more unit changes as production increases, typically U-shaped due to economies and diseconomies of scale.

Average Total Cost Curve

A graphical representation showing the average cost per unit of output, calculated by dividing total costs (both fixed and variable) by the number of units produced.

Average Variable Cost Curve

A graphical representation that shows the relationship between a firm's total variable costs and output levels.