c) A manufacturer is considering the production of a new and better mousetrap.She estimates the probability that the new mousetrap is successful is ¾. If itis successful, it would generate profits of $174,000. The development costsof the mousetrap are $121,000. Should the manufacturer proceed with plansfor the new mousetrap? Why or why not?

It is required to determine whether the manufacturer should proceed with plans for the new…

Answered: c) A manufacturer is considering the…

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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Charlie buys a one-year term home insurance policy for $p, that will pay $200,000 in the event of a major catastrophe and $35,000 in the event of a minor catastrophe. Charlie's home has a 0.2% chance of a major catastrophe and a 0.7% of a minor catastrophe during the one year term. What did the insurance company charge Charlie for this policy if the company expected to break even?
The proprietor of Midland Construction Company has to decide between two projects. He estimates that the first project will yield a profit of $180,000 with a probability of 0.7 or a profit of $130,000 with a probability of 0.3; the second project will yield a profit of $220,000 with a probability of 0.7 or a profit of $80,000 with a probability of 0.3.Find the expected profit for each project. first project $ second project $
Oxnard petri Ltd is buying hurricane insurance for it's off-coast drilling platform. During the next five years, the probability of total loss of only the above-water superstructure ($250 million) is .25, the probability of total loss of the facility ($950 million) is.25, and the probability of no loss is.50. Find the expected loss.( Input the amount as a positive value.) Expected Loss is what?
Your car is making a funny noise. You believe that the problem is either with the wheel or the axle, and you believe the probability is 0.3 that the wheel needs to be replaced, and 0.7 that the axle needs to be replaced. You need to decide whether to replace the wheel or the axle first. The cost of each alternative is given in the following table (if you decided to replace the wrong part first, you have to replace both of them). The Wheel is broken p = 0.3 The Axle is broken p = 0.7 Replace Wheel First Replace Axle First 600 1500 1500 900 a) Find the EV of each decision alternative. Which part should you replace first? b) What is the EVPI?
Bob, the proprietor of Midway Lumber, bases his projections for the annual revenues of the company on the performance of the housing market. He rates the performance of the market as very strong, strong, normal, weak, or very weak. For the next year, Bob estimates that the probabilities for these outcomes are 0.15, 0.25, 0.39, 0.09, and 0.12, respectively. He also thinks that the revenues corresponding to these outcomes are $23, $18.6, $16.9, $14, and $6 million, respectively. What is Bob's expected revenue for next year?
The proprietor of Midland Construction Company has to decide between two projects. He estimates that the first project will yield a profit of $160,000 with a probability of 0.7 or a profit of $120,000 with a probability of 0.3; the second project will yield a profit of $220,000 with a probability of 0.6 or a profit of $70,000 with a probability of 0.4.Find the expected profit for each project. first project $ second project $ Which project should the proprietor choose if he wants to maximize his expected profit? first project second project
A gambler uses theory to calculate the probability of winning a card game and gets P(winning) = 0.10. Which option best describes the meaning of this probability? A. He will win 10 times B. In the long run he will win approximately 10% of the time C. He will win on every 10th play D. He is guaranteed to win exactly 10% of the time
Suppose an oil company is thinking of buying some land for $10,000,000. There is a 60%60% chance of economic growth and a 40%40% chance of recession. The probability of discovering oil is 44%44% when there is economic growth and 32%32% when there is a recession. If there is economic growth and the oil company discovers oil, the value of the land will triple. If they do not discover oil, the value of the land will decrease by 10%.10%. If there is a recession and the company discovers oil, the value of the land will increase by 50%.50%. If they do not discover oil, the land will decrease in value by 75%.75%. What is the expected value of the investment? Give your answer to the nearest dollar. Avoid rounding within calculations. $$ Select the correct interpretation of the expected value. The expected value represents what the actual investment value will be for this land purchase of $10,000,000. The company should make the investment because the expected value…
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Oilco must determine whether or not to drill for oil inthe South China Sea. It costs $100,000, and if oil is found,the value is estimated to be $600,000. At present, Oilcobelieves there is a 45% chance that the field contains oil.Before drilling, Oilco can hire (for $10,000) a geologist toobtain more information about the likelihood that the fieldwill contain oil. There is a 50% chance that the geologistwill issue a favorable report and a 50% chance of anunfavorable report. Given a favorable report, there is an 80% chance that the field contains oil. Given an unfavorablereport, there is a 10% chance that the field contains oil.Determine Oilco’s optimal course of action. Also determineEVSI and EVPI.
An option to buy a stock is priced at $150. If the stock closes above 30 next Thursday, the option willbe worth $1000. If it closes below 20, the option will be worth nothing, and if it closes between 20and 30, the option will be worth $200. A trader thinks there is a 50% chance that the stock will closein the 20-30 range, a 20% chance that it will close above 30, and a 30% chance that it will fall below20. a) Create a valid probability table.b) How much should the trader expect to gain or lose?c) Should the trader buy the stock? Why?
Chandler offers you the opportunity to play his $2 game where he shuffles four cards and you must pick the correct one. What is the expected profit per person if the prize is a $1.25 coke for the game?Single line text.

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