Independent solution

How to solve this Pareto Distribution question

Setup

Setup

The distribution is Pareto with scale 200 and shape 2.5. The target is the 70th percentile minus the 30th percentile.

F(x)=1(200x)2.5,x>200F(x)=1-\left(\frac{200}{x}\right)^{2.5},\qquad x>200

Model

Model

Set the cumulative probability at the target quantile equal to p and invert the corresponding Pareto survival probability.

xp=200(1p)0.4x_p=\frac{200}{(1-p)^{0.4}}

Compute

Compute

Evaluate the two quantiles using survival probabilities 0.30 and 0.70, respectively. Their difference is 93.06.

x0.70x0.30=2000.300.42000.700.4x_{0.70}-x_{0.30}=\frac{200}{0.30^{0.4}}-\frac{200}{0.70^{0.4}}
x0.70x0.30=93.06x_{0.70}-x_{0.30}=93.06

Answer

Answer

The requested percentile spread rounds to 93, which is choice B.

93(B)\boxed{93\quad\text{(B)}}