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Leni [432]
4 years ago
13

motors are packaged for sale in a certain warehouse. The motors sell for $100 each, but a double-your-money-back guarantee is in

effect for any defectives the purchaser may receive (i.e. the seller pays buyer $200 for any defective item). Find the expected net gain for the seller if the probability of any one motor being defective is 0.08. (Assume that the quality of any one motor is independent of that of the others.) Show all work by defining the variables of interest and its distributions.
Business
1 answer:
ss7ja [257]4 years ago
6 0

Answer:

$840

Explanation:

the question misses an important detail, number of motors.

I used 10 as the total number of cars. from the solution i believe you would be able to solve any other problem of this sort yourself.

n = 10

p = 1-probability of any 1 motor being defective

= 1-0.08

= 0.92

going further in solving this problem, i will use the binomial distribution

we have expected value as;

Σxp(x)

= $100 x p(of 100) - $100 x p(of losing 100)

= 100(0.92) - 100(0.08)

= 92 - 8

= $84

from here we multiply 84$ by n

remember n =  total number of cars = 10

10 x $84

= <u>$840</u>

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