Statistical Techniques in Business and Economics
18th Edition
ISBN: 9781260788785
Author: Lind, Douglas
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 20, Problem 10E
To determine
Find the expected profit for both bottling decisions.
Give the recommended decision.
Check whether the decision alters or not when compared to the exercise 2.
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Statistical Techniques in Business and Economics
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- The equation below estimates the effect of race on the probability of mortgage denial, holding constant the payment-to-income ratio. Pr(deny = 1|P/I ratio, black) = 0(-2.21 + 2.73P/I ratio + 0,75black) %3! (0.16) (0.45) (0.085) A black mortgage applicant has a PA ratio of 0.39. What is the predicted probability that his application will be denied? The predicted probability that his application will be denied is 34.64 %. (Express your response as a percentage and round to two decimal places) o Suppose that the applicant reduced this ratio to 0.31. What effect would this have on his predicted probability of being denied a mortgage? The predicted probability of being denied a mortgage would decrease by 7.67 percentage points. (Round your response to two decimal places) ck A white mortgage applicant has a P/I ratio of 0.36. What is the predicted probability that his application will be denied? on The predicted probability that his application wil be denied is%. ory (Express your response…arrow_forwardA customer for a home insurance policy owns a $200,000 home. The probability is 0.1% that the home will be totally destroyed by fire, and the probability is 0.5% that the home will suffer a 50% loss due to fire. Ignoring all other partial losses, the insurance company is interested in determining what premium it should charge for a policy just to break even. Let ? = ?ℎ? ?????? ?? ???????????? ???? ?? ?ℎ? ????????. State the Sample Space for the r.v. X INCLUDE the units: { } (i.e. list all the possible outcomes for the amount of compensation paid to the customer in $) HINT: make a probability distribution tablearrow_forwardYou are deciding to launch your own jewelry line. After researching the market, you predict you have a 37% chance of earning $5,200, a 28% chance of breaking even, and a 35% chance of losing $3,800. Calculate the expected value. Is this a good investment? Explain.arrow_forward
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