Question

Gasoline prices in the state of Virginia were sampled this summer and determined to have an average price of $3.25/gallon with a standard deviation of $.55. A particular Virginia gas station advertises gasoline for $3.80/gallon. Compute and interpret the 2-score for this gas station. AnswerHow to Enter) 1 Point Tables Keypad Keyboard Shortcuts The gas price of this station falls 3.8 standard deviations below the mean gas price of all Virginia gas stations The gas price of this station falls 1 standard deviation above the mean gas price of the sampled Virginia stations The gas price of this station falls 3.8 standard deviations below the mean price of $0. Next Prev The gas price of this station falls 1 standard deviation below the mean gas price of the sampled Virginia stations, None of the above

Answer 1

z score =

(observed value-mean of the sample)/Standard deviation of the sample

Observed value	3.8
mean of the sample	3.25
standard deviation of the sample	0.55

Z =

(3.8-3.25)/.55 =

1.00

Interpretation

The gas price of this station falls 1 standard deviation above the mean gas price of the sampled Virginia stations.

A positive z-score indicates the gas price of the station is higher than the mean average. Ie., a z-score is equal to +1 implies it is 1 standard deviation above the mean.