STAT TECH IN BUSINESS & ECON AC
18th Edition
ISBN: 9781264731657
Author: Lind
Publisher: MCG
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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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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, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.07 (7% of all such individuals).
Homeowner's
Auto
N
L
M
H
L
0.04
0.07
0.05
0.01
M
0.07
0.08
0.20
0.13
H
0.02
0.03
0.15
0.15
Suppose an individual having both types of policies is randomly selected.
(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 individual has at least one low deductible level?(f) Using the answer in part (e), what is the probability that neither deductible level is low?
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, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.07 (7% of all such individuals).
Homeowner's
Auto
N
L
M
H
L
0.04
0.07
0.05
0.04
M
0.07
0.09
0.20
0.09
H
0.02
0.03
0.15
0.15
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?
auto deductible
homeowner's deductible
(c) What is the probability that the individual is in the same…
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, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.07 (7% of all such individuals).
Homeowner's
Auto
N
L
M
H
L
0.04
0.07
0.05
0.01
M
0.07
0.11
0.20
0.10
H
0.02
0.03
0.15
0.15
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?
auto deductible
homeowner's deductible
(c) What is the probability that the individual is in the same…
Chapter 20 Solutions
STAT TECH IN BUSINESS & ECON AC
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- A survey by the Arthur Andersen Enterprise attempted to determine what the leading challenges are for the growth and survival of small businesses. Although the economy and finding qualified workers were the leading challenges, several others were listed in the results of the study, including regulations, listed by 30% of the companies, and the tax burden, listed by 35%. Suppose that 71% of the companies listing regulations as a challenge also listed the tax burden as a challenge. Assume these percentages hold for all small businesses. 1. If a small business is randomly selected, find the following probabilities: (a) The small business lists either the tax burden or regulations as a challenge. (b) The small business lists either the tax burden or regulations but not both as a challenge. (c) The small business does not list regulations as a challenge given that it lists the tax burden as a challenge. (d) The small business does not list regulations as a challenge given that it does not…arrow_forwardMr. William Profit is studying companies going public for the first time. He is particularlyinterested in the relationship between the size of the offering and the price per share.A sample of 15 companies that recently went public revealed the following information.arrow_forwardAn 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 policy- holders who have both types of insurance. For example, the proportion of individuals with both low homeowner's deductible and low auto deductible is .06 (6% of all such individuals). Homeowner's Auto N M H .04 .06 .05 .03 M .07 .10 .20 .10 H .02 .03 .15 .15 Suppose an individual having both types of policies is ran- domly 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…arrow_forward
- Three businesswomen are trying to convene in Cincinnati for a business meeting. The first women (Woman 1) is arriving on a flight from Atlanta, the second (Woman 2) is arriving on a flight from Dallas, and the third (Woman 3) is arriving on a flight from Chicago. Historical data suggests that the Atlanta flight is “on time” 90% of the time, the Dallas flight is “on time” 95% of the time, and the Chicago flight is “on time” 80% of the time. Furthermore, historical data suggests that the three flights are independent with respect to on time behavior. Define the sample space for this random experiment. Compute the probability for each of the outcomes in the sample space. Let W denote the number of business women that arrive on time. Construct the probability mass function of W Construct the cumulative distribution function of W Find the expected value of W Compute the standard deviation of Warrow_forwardAn 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, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.07 (7% of all such individuals). Auto L M H Homeowner's NLMH 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? 0.04 0.07 0.05 0.02 0.07 0.09 0.20 0.11 0.02 0.03 0.15 0.15 (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible homeowner's deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's deductibles?…arrow_forwardAn 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, the proportion of individuals with both low homeowner's deductible and low auto deductible is 0.07 (7% of all such individuals). Homeowner's H N L M 0.04 0.07 0.05 0.01 0.07 0.08 0.20 0.13 0.02 0.03 0.15 0.15 Auto L M H 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? 0.13 (b) What is the probability that the individual has a low auto deductible? A low homeowner's deductible? auto deductible 0.17 homeowner's deductible (c) What is the probability that the individual is in the same category for both auto and homeowner's…arrow_forward
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