a sample of restraunts in a city showed that the average cost of a glass of iced tea is $1.25 with a standard deviation of 7 cents. if a new restraunt charges a price for iced tea that has a z value of 1.25, then what is the teas actual cost
z = (x-mean)/sigma
so
x = mean + z*sigma
1.25*7 = 8.75 cents
1.25 + .0875 = $1.34
To determine the actual cost of the iced tea at the new restaurant, we can use the formula:
Actual cost = Mean + (Z-score × Standard deviation)
1. Firstly, let's identify the given values:
- Mean (μ) = $1.25 (average cost of a glass of iced tea)
- Standard deviation (σ) = $0.07 (standard deviation of the cost)
2. Next, we need to find the Z-score.
Z-score = 1.25 (given z value)
3. Now, substitute the values into the formula and calculate:
Actual cost = $1.25 + (1.25 × $0.07)
Actual cost = $1.25 + $0.0875
Actual cost = $1.3375
Therefore, the actual cost of the iced tea at the new restaurant is $1.3375.