Independent solution

How to solve this Continuous Random Variables question

Setup

Setup

Write the proportional density with constant c and normalize it over its unbounded support.

1=c100x2dx1=c\int_{100}^{\infty}x^{-2}\,dx
1=c1001=\frac{c}{100}
c=100c=100

Model

Model

Integrating the normalized density above a threshold gives a particularly simple survival function.

Pr(X>x)=x100t2dt=100x,x100\Pr(X>x)=\int_x^{\infty}100t^{-2}\,dt=\frac{100}{x},\qquad x\ge100

Compute

Compute

A median leaves one half of the probability above it.

100m=0.50\frac{100}{m}=0.50
m=200m=200

Answer

Answer

The median loss is 200.

200(D)\boxed{200\quad\text{(D)}}