Loose Leaf for Statistical Techniques in Business and Economics
17th Edition
ISBN: 9781260152647
Author: Douglas A. Lind
Publisher: McGraw-Hill Education
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Chapter 20, Problem 4E
To determine
Construct an opportunity loss table.
Find the opportunity loss for each decision.
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A friend who lives in Los Angeles makes frequent consultingtrips to Washington, D.C.; 50% of the time shetravels on airline #1, 30% of the time on airline #2, and the remaining 20% of the time on airline #3. For airline#1, flights are late into D.C. 30% of the time and late intoL.A. 10% of the time. For airline #2, these percentagesare 25% and 20%, whereas for airline #3 the percentagesare 40% and 25%. If we learn that on a particular trip shearrived late at exactly one of the two destinations, whatare the posterior probabilities of having flown on airlines#1, #2, and #3? Assume that the chance of a late arrival inL.A. is unaffected by what happens on the flight to D.C.[Hint: From the tip of each first-generation branch on atree diagram, draw three second-generation brancheslabeled, respectively, 0 late, 1 late, and 2 late.]
An insurance company offers four different deductible levels—none, low, medium, and high—for its homeowner’s policyholders and three different levels—low, medium, and high—for its automobile policyholders. The accompanying table gives proportions for the various categories of policyholders who have both types of insurance. For example, theproportion of individuals with both low homeowner’s deductible and low auto deductible is .06 (6% of all such individuals).Suppose an individual having both types of policies is randomly selected.a. What is the probability that the individual has a medium auto deductible and a high homeowner’s deductible?b. What is the probability that the individual has a low auto deductible? A low homeowner’s deductible?c. What is the probability that the individual is in the same category for both auto and homeowner’s deductibles?d. Based on your answer in part (c), what is the probability that the two categories are different?e. What is the probability that the…
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Loose Leaf for Statistical Techniques in Business and Economics
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