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February 5th, 2016, 07:13 PM   #1
Joined: Feb 2016
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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?
muktesh91 is offline  
February 6th, 2016, 01:42 PM   #2
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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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