Let X be the damage incurred (in $) in a certain type of

Probability and Statistics for Engineering and the Sciences | 9th Edition | ISBN: 9780321629111 | Authors: Ronald E. Walpole, Raymond H. Myers

Problem 36E Chapter 3

Probability and Statistics for Engineering and the Sciences | 9th Edition

  • 2901 Step-by-step solutions solved by professors and subject experts
  • Get 24/7 help from StudySoup virtual teaching assistants
Probability and Statistics for Engineering and the Sciences | 9th Edition | ISBN: 9780321629111 | Authors: Ronald E. Walpole, Raymond H. Myers

Probability and Statistics for Engineering and the Sciences | 9th Edition

4 5 0 321 Reviews
15
2
Problem 36E

Let X be the damage incurred (in $) in a certain type of accident during a given year. Possible X values are 0, 1000, 5000, and 10000, with probabilities .8, .1, .08, and .02, respectively. A particular company offers a $500 deductible policy. If the company wishes its expected profit to be $100, what premium amount should it charge?

Step-by-Step Solution:

Answer Step 1 of 3 Let x=The damage incurred y=premium should charge g=The cost to insurance company Then g(x)=x-500 y(x)=E(g(x))+100 P(x)= probability assigned Step 2 of 3 x P(x) g(x)=x-500 y(x) 0 0.8 0 100 1000 0.1 500 600 5000 0.08 4500 4600 10000 0.02 9500 9600

Step 3 of 3

Chapter 3, Problem 36E is Solved
Textbook: Probability and Statistics for Engineering and the Sciences
Edition: 9
Author: Ronald E. Walpole, Raymond H. Myers
ISBN: 9780321629111

Unlock Textbook Solution

Enter your email below to unlock your verified solution to:

Let X be the damage incurred (in $) in a certain type of

×
Log in to StudySoup
Get Full Access to Probability And Statistics For Engineering And The Sciences - 9 Edition - Chapter 3 - Problem 36e

Forgot password? Reset password here

Join StudySoup for FREE
Get Full Access to Probability And Statistics For Engineering And The Sciences - 9 Edition - Chapter 3 - Problem 36e
Join with Email
Already have an account? Login here
Reset your password

I don't want to reset my password

Need help? Contact support

Need an Account? Is not associated with an account
Sign up
We're here to help

Having trouble accessing your account? Let us help you, contact support at +1(510) 944-1054 or support@studysoup.com

Got it, thanks!
Password Reset Request Sent An email has been sent to the email address associated to your account. Follow the link in the email to reset your password. If you're having trouble finding our email please check your spam folder
Got it, thanks!
Already have an Account? Is already in use
Log in
Incorrect Password The password used to log in with this account is incorrect
Try Again

Forgot password? Reset it here