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February 5th, 2016, 07:13 PM  #1 
Newbie Joined: Feb 2016 From: India Posts: 1 Thanks: 0  Probablity crv problem
Suppose that an electric device has a life length X which is considered as random variable with pdf ;f(x)=e^x;x>0. Suppose that the cost of manufacturing one such item is 2. The manufacturer sells the item for 5 but guarantees a total refund if x= 0.9. What is the manufacturer expected profit per item? 
February 6th, 2016, 01:42 PM  #2 
Global Moderator Joined: May 2007 Posts: 6,730 Thanks: 689 
I presume you meant $\displaystyle e^{x}$ for the density function. P(X<.9)=.6, therefore his expected return $\displaystyle .6*0+.4*5=2 $, so he breaks even.


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