An Introduction to Mathematical Statistics and Its Applications (6th Edition)

Published by Pearson
ISBN 10: 0-13411-421-3
ISBN 13: 978-0-13411-421-7

Chapter 3 Random Variables - 3.5 Expected Values - Questions - Page 153: 31

Answer

$\color{blue}{\$50,\!000}$

Work Step by Step

\begin{align*} E(Q(Y)) &= E(\underbrace{2(1-e^{-2Y}}_{\times 10^5})) \\ &= \int_{\mathbb{R}} \underbrace{2(1-e^{-2y})}_{\times 10^5}\cdot f_Y(y)\ dy \\ &= \int_0^\infty \underbrace{2(1-e^{-2y})}_{\times 10^5}\cdot(6e^{-6y})\ dy \qquad \left[\ \text{since}\ f_Y(y)=6e^{-6y},\ y \gt 0\ \right] \\ &= (12\times 10^5) \int_0^\infty (e^{-6y} - e^{-8y})\ dy \\ &= (12\times 10^5)\left( \frac{e^{-6y}}{-6} - \frac{e^{-8y}}{-8}\right)_0^\infty \\ &= (12\times 10^5)\left[\left( \frac{e^{-\infty}}{-6} - \frac{e^{-\infty}}{-8}\right) - \left( \frac{e^{-0}}{-6} - \frac{e^{-0}}{-8}\right)\right] \\ &= (12\times 10^5)\left[\left( \frac{0}{-6} - \frac{0}{-8}\right) - \left( \frac{1}{-6} - \frac{1}{-8}\right)\right] \\ &= (12\times 10^5)\left[\left(0 - 0\right) + \frac{1}{6} - \frac{1}{8}\right] \\ &= (12\times 10^5)\left(\frac{8-6}{48}\right) \\ &= (10^5)\left(\frac{24}{48}\right) \\ &= \frac{10^5}{2} \\ \color{blue}{E(Q(Y))}\ &\color{blue}{=50,\!000} \end{align*} The company's expected profit is $\color{blue}{\$50,\!000}$.
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