How many safety devices will be installed in each car

Assignment Help Basic Statistics

Reference no: EM131762899

Question: A car manufacturer is considering how many safety devices to install on a new car. The devices function independently and each one works with probability .9. Furthermore, they are connected "in parallel" so that if any one of the devices installed works the car will be safe. How-ever, if they all fail the car will explode just as it is driven off the dealer's lot! The ensuing lawsuit (initiated by the estate for the unfortunate customer) will cost the manufacturer $1,000,000 every time this occurs. On the other hand, each safety device costs $100 to install. The car itself (without safety devices) costs $5,000 to build. Assume that the manufacturer will sell N (a given) cars at $10,000 each no matter how many safety devices are installed and that the firm wants to maximize the expectation of its profits.

a. How many safety devices will be installed in each car?

b. Given the answer to part (a), what will be the expectation and variance of their profits?

c. If N = 20, what is the probability that the firm will have at least one fatality arising from their choice of the number of safety devices installed?

d. The existence of the deliberations is leaked to Hard Copy and their next show claims "Auto Firm Puts Value on Human Life." Did the firm put a value on human life, and, if so, is this in and of itself worthy of condemnation?

Reference no: EM131762899

Questions Cloud

What is the maximum price you will pay for a bond : What is the maximum price you will pay for a bond with a face value of $1000 and a coupon rate of 14%, paid annually

Contrast product development with market development : Compare and contrast product development with market development. Market Development - selling existing products to new markets.

Is there an advantage to having adhd : Is there an advantage to having ADHD? What kind of things can a family do to improve the life of a child who has ADHD?

Computer game that includes some extremely violent actions : One of CompTac’s best-selling products is a computer game that includes some extremely violent actions.

How many safety devices will be installed in each car : A car manufacturer is considering how many safety devices to install on a new car. The devices function independently and each one works with probability .9.

Examine effect of principle on the development of health law : Examine the effect of each principle on the development of health law and decision-making in the United States. Include specific examples of each.

Explain how a manager can be an effective listener : Explain how a manager can be an effective listener.

What is the maximum cca deduction that h can claim : What is the maximum CCA deduction that H can claim in the current year

Review problem related to econometrics exam : As you walk into your econometrics exam, a friend bets you SIO that she will outscore you on the exam. Let X be a random variable denoting your winnings.

User Account

All Pages