I am working on the following problem:
I'm having a hard time putting all of this information together:
The cost of the maintenance is Z=X+Y, where X is the cost of the first machine and Y is the cost of the second machine.
The payment T by the insurer is Z if 0≤Z≤6000 and 6000 if Z>6000.
T(Z)={Zif 0≤Z≤60006000if Z>6000
We want to find E[T(Z)]=T(Z)⋅Pr[T(Z)].
From here I am uncertain about how to proceed. I know that a uniform random variable on [0,4000] has expected value 40002=2000. This has a probability of 13 of occurring.
I would think E[X]=E[Y]=40006, and so E[Z]=40003.
I am just unsure of how to factor in what the insurer is actually paying.
Answer
The probability of (0,0) occurring is 23⋅23; the probability of (0,y) occurring, for $0
Solving this calculus problem (splitting the last integral at the line x+y=6000) gives the answer \frac{35750}{27} \approx 1324.07.
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