Monty buys hats in bulk to sell at his store. His cost for each hate is $17. He marks up the hats 45%. What is the retail price
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Answer:
a) The probability that at least 3 months elapse before the first earthquake of destructive magnitude occurs is P=0.7788
b) The probability that at least 7 months elapsed before the first earthquake of destructive magnitude occurs knowing that 3 months have already elapsed is P=0.7165
Step-by-step explanation:
Tha most appropiate distribution to model the probability of this events is the exponential distribution.
The cumulative distribution function of the exponential distribution is given by:
The destructive earthquakes happen in average once a year. This can be expressed by the parameter λ=1/year.
We can express the probability of having a 3 month period (t=3/12=0.25) without destructive earthquakes as:
Applying the memory-less property of the exponential distribution, in which the past events don't affect the future probabilities, the probability of having at least 7 months (t=0.58) elapsed before the first earthquake given that 3 months have already elapsed, is the same as the probability of having 4 months elapsed before an earthquake.