BUSI 2305 ch 5

For a particular clothing store, a marketing firm finds that 16% of $10-off coupons delivered by mail are redeemed. Suppose six customers are randomly selected and are mailed $10-off coupons. What is the expected number of coupons that will be redeemed?

0.96

What are the two key properties of a discrete probability distribution?

0≤P (X = x) ≤1 and ∑P (X = xi ) = 1

According to geologists, the San Francisco Bay Area experiences five earthquakes with a magnitude of 6.5 or greater every 100 years. What is the standard deviation of the number of earthquakes with a magnitude of 6.5 or greater striking the San Francisco Bay Area in the next 40 years?

1.414

According to a Department of Labor report, the city of Detroit had a 20% unemployment rate in May. Eight working-age residents were chosen at random. What was the expected number of unemployed residents, when eight working-age residents were randomly selected?

1.6

According to geologists, the San Francisco Bay Area experiences five earthquakes with a magnitude of 6.5 or greater every 100 years. What is the expected value of the number of earthquakes with a magnitude of 6.5 or greater striking the San Francisco Bay Area in the next 40 years?

2.000

How would you characterize a consumer who is risk loving?

A consumer who may accept a risky prospect even if the expected gain is negative.

Which of the following statements is the most accurate about a binomial random variable?

It counts the number of successes in a given number of trials.

Which of the following statements is the most accurate about a Poisson random variable?

It counts the number of successes in a specified time or space interval.

Which of the following is best described as a Poisson variable?

The number of positive reviews in a week.

A consumer who is risk neutral is best characterized as ______________________________________________________.

a consumer who completely ignores risk and makes his or her decisions based solely on expected values

A consumer who is risk averse is best characterized as __________.

a consumer who demands a positive expected gain as compensation for taking risk

On a particular production line, the likelihood that a light bulb is defective is 5%. Ten light bulbs are randomly selected. What are the mean and variance of the number of defective bulbs? a. 0.475 and 0.475 b. 0.475 and 0.6892 c. 0.50 and 0.475 d. 0.50 and 0.6892

c

According to a study by the Centers for Disease Control and Prevention, about 33% of U.S. births are Caesarean deliveries. Suppose seven expectant mothers are randomly selected. The expected number of mothers who will not have a Caesarean delivery is ______. a. 1.24 b. 2.31 c. 3.50 d. 4.69

d

We can think of the expected value of a random variable X as ________.

the long-run average of the random variable values generated over infinitely many independent repetitions