quiz2AS-M1_f10 - Econ 506, Section M1 Quiz 2A, Sept. 30,...

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Econ 506, Section M1 NAME:_ SOLUTION_ _____ Quiz 2A, Sept. 30, 2010 Total points: 50 I. (8 points) Suppose an economist is organizing a survey of American minimum wage workers, and is interested in understanding how many workers that earn the minimum wage are teenagers.' Suppose further that one out of every four minimum wage workers is a teenager. If the economist finds 10 minimum wage workers for his survey, what's the probability that he interviews at least one teenager? Assume Y = # of teenagers in 10 selection. Then Y has Binomial distribution with p = . 25, n = 10. 943686485 . 0 056313515 . 0 1 ) 1 ( 0 10 1 ) 0 ( 1 ) 1 ( 0 10 0 = - = - - = = - = - p p Y P Y P II. (10 points) accident records collected by an automobile insurance company give the following information. The probability that an insured driver has automobile accidents is 0.15. If an accident has occurred, the damage to the vehicle amounts to 20% of its market value with a probability of 0.8, to 60% of its market value with a probability of 0.12, and
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This note was uploaded on 04/13/2011 for the course ECON 506 taught by Professor Staff during the Fall '08 term at University of Illinois, Urbana Champaign.

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quiz2AS-M1_f10 - Econ 506, Section M1 Quiz 2A, Sept. 30,...

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