How do you derive mean of Pareto distribution?

Answer 1

You must know calculus, at least that the integral of xN = 1/(N+1)xN+1 . Define the Pareto distribution as: f(x) = abax-(a+1) or Cx-(a+1) where C = aba (a constant) Remember that the pdf is defined over the domain [b, inf] otherwise zero. Mean = integral xf(x) evaluated from b to infinity. Remember also that the limit of 1/x as x goes to infinity = 0. Similarly for any positive a, (1/x)a goes to 0 as x goes to infinity. mean = integral C x-(a+1)x dx = integral Cx-a = C(1/(-a+1))x-a+1 evaluated over the interval b to infinity. The integral is zero at infinity, so the mean = C(0-1/(-a+1))b-a+1 Remember b-a+1 = b-ab After substituting and cancelling mean = ab/(a-1) for a greater than 1.