An appliance dealer sells three different models of freezers with advertised cap

Question

An appliance dealer sells three different models of freezers with advertised capacity of 13, 16 and 20 cubic feet. Let X = the amount of storage space of the freezer purchased by the next customer.

PMF of X is below

x 13 16 20

p(x) .2 .5 .3

a) The price of a freezer having cubic capacity X is given by 25X – 20. What are the expected value and variance of the price paid by the next customer?

b) Suppose that although the advertised capacity of a freezer is X, the actual capacity is h(X) = X – 0.01 X^2. What are the expected value and variance of h(X), the actual capacity of the freezer bought by the next customer?

Explanation / Answer

An appliance dealer sells three different models of freezers with advertised cap

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