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Number of Channels Probabilty of Subscriptions 3. Study the table given and answ

ID: 3124960 • Letter: N

Question

Number of Channels Probabilty of Subscriptions

3. Study the table given and answer the question after you calculate four possibilities.

a. 1 free premium channel, 5 subscriptions, pi = 0.04, P(X 5) =

b. 3 free premium channels, 6 subscriptions, pi = 0.07, P(X 6) =

c. 4 free premium channels, 6 subscriptions, pi = 0.08, P(X 6) =

d. (5 points) 5 free premium channels, 7 subscriptions, pi = 0.085, P(X 7) =

Given all the evidence that you have collected from all your surveys of 50 prospective customers, answer the question with full explanation. Use this entire assignment not only answers to #3. [Hint: Consider AMS’s profits in your answer.] How many free premium channels should the research director recommend for inclusion in the 3-For-All service?

0 0.02 1 0.04 2 0.06 3 0.07 4 0.08 5 0.085

Explanation / Answer

a. 1 free premium channel, 5 subscriptions, pi = 0.04, P(X 5) = 1 - 0.02 = 0.98

b. 3 free premium channels, 6 subscriptions, pi = 0.07, P(X 6) = 1 - 0.02 - 0.04 - 0.06= 0.88

c. 4 free premium channels, 6 subscriptions, pi = 0.08, P(X 6) = 1 - 0.02 - 0.04 - 0.06 - 0.07 = 0.81

d. 5 free premium channels, 7 subscriptions, pi = 0.085, P(X 7) = 1 - 0.02 - 0.04 - 0.06 - 0.07 - 0.08 = 0.73