CAIE S2 2007 November — Question 4

Exam BoardCAIE
ModuleS2 (Statistics 2)
Year2007
SessionNovember
TopicLinear combinations of normal random variables
TypeExpectation and variance with context application

4 The cost of electricity for a month in a certain town under scheme \(A\) consists of a fixed charge of 600 cents together with a charge of 5.52 cents per unit of electricity used. Stella uses scheme \(A\). The number of units she uses in a month is normally distributed with mean 500 and variance 50.41.
  1. Find the mean and variance of the total cost of Stella's electricity in a randomly chosen month. Under scheme \(B\) there is no fixed charge and the cost in cents for a month is normally distributed with mean 6600 and variance 421. Derek uses scheme \(B\).
  2. Find the probability that, in a randomly chosen month, Derek spends more than twice as much as Stella spends.