The article “Traps in Mineral Valuations—Proceed With

Chapter 2, Problem 14SE

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QUESTION:

The article “Traps in Mineral Valuations—Proceed With Care” (W. Lonegan, Journal of the Australasian Institute of Mining and Metallurgy, 2001:18–22) models the value (in millions of dollars) of a mineral deposit yet to be mined as a random variable X with probability mass function \(p(x)\) given by \(p(10)=0.40\), \(p(60)=0.50\), \(p(80) = 0.10\), and \(p(x)=0\) for values of x other than 10, 60, or 80.

a. Is this article treating the value of a mineral deposit as a discrete or a continuous random variable?

b. Compute \(\mu_X\).

c. Compute \(\sigma_X\).

d. The project will be profitable if the value is more than $50 million. What is the probability that the project is profitable?

Equation Transcription:

Text Transcription:

p(x)

p(10)=0.40

p(60)=0.50

p(80)=0.10

p(x)=0

mu_X

sigma_X

Questions & Answers

QUESTION:

The article “Traps in Mineral Valuations—Proceed With Care” (W. Lonegan, Journal of the Australasian Institute of Mining and Metallurgy, 2001:18–22) models the value (in millions of dollars) of a mineral deposit yet to be mined as a random variable X with probability mass function \(p(x)\) given by \(p(10)=0.40\), \(p(60)=0.50\), \(p(80) = 0.10\), and \(p(x)=0\) for values of x other than 10, 60, or 80.

a. Is this article treating the value of a mineral deposit as a discrete or a continuous random variable?

b. Compute \(\mu_X\).

c. Compute \(\sigma_X\).

d. The project will be profitable if the value is more than $50 million. What is the probability that the project is profitable?

Equation Transcription:

Text Transcription:

p(x)

p(10)=0.40

p(60)=0.50

p(80)=0.10

p(x)=0

mu_X

sigma_X

ANSWER:

Solution 14SE

Step1 of 3:

We have models the value of a mineral deposit yet to be mined as a random variable X with probability mass function p(x) given by

P(10) = 0.40,

P(60) = 0.50,

P(80) = 0.10 and

P(x) = 0 for values of x other than 10, 60, or 80.

We need to find,

a).Is this article treating the value of a mineral deposit as a discrete or a continuous random variable?

b).Compute.

c).Compute .

d).The project will be profitable if the value is more than $50 million. What is the probability that the project is profitable?

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