Answer:
1)
FLAW TYPE2 NO TYPE2 FLAW
TYPE1 0.015 0.025
NO TYPE1 FLAW 0.01 0.95
2) 0.04 and $0.04
3) 0.025 and $0.025
4) 0.015 and $0.015
5) 0.95 and $0.95
Step-by-step explanation:
Given that;
financial cost = $1
p(flaw) = 0.05
p(type 1 flaw / flaw) = 80% = 0.8
p(type 2 flaw / flaw) = 50% = 0.5
p( type 1 and 2 flaw/flaw) = 30% = 0.30
1) Bivariate Table
p( type 1 flaw) = p(flaw) × p(type 1 flaw/flaw) = 0.05 × 0.8 = 0.04
p( type 2 flaw) = p(flaw) × p(type 2 flaw/flaw) = 0.05 × 0.5 = 0.025
p( type 1 and 2 flaw) = p(flow) × p( type 1 & 2 flaw/flaw) = 0.05 × 0.3 = 0.015
p( only 1 flow) = 0.04 - 0.015 = 0.025
p( only 2 flow) = 0.025 - 0.015 = 0.01
THEREFORE the Bivariate Table;
FLAW TYPE2 NO TYPE2 FLAW
TYPE1 0.015 0.025
NO TYPE1 FLAW 0.01 0.95
2) probability and expectations of type 1 flaw?
p( type 1 flaw) = p(flaw) × p(type 1 flaw/flaw) = 0.05 × 0.8 = 0.04
Expected financial cost to the firm per good = $1 × 0.04 = $0.04
3) probability and expectation of Type 2 flaw
p( type 2 flaw) = p(flaw) × p(type 2 flaw/flaw) = 0.05 × 0.5 = 0.025
Expected financial cost to the firm per good = $1 × 0.025 = $0.025
4)
probability and expectations of Type 1 and 2 flaws
p( type 1 and 2 flaw) = p(flow) × p( type 1 & 2 flaw/flaw) = 0.05 × 0.3 = 0.015
Expected financial cost to the firm per good = $1 * 0.015 = $0.015
5) probability and expectations of no flaws?
Probability of no flaw = P(No flaw) =95% = 0.95
Expected financial cost saved the firm per good due to no flaw
= $1 × 0.95 = $0.95
