An air traveler from Istanbul to Ankara have two options on Turkish Airlines: a 190 TL fare with a 50% cancellation penalty, and a 250 TL fare with a 10% penalty. Assume that the probability of traveler canceling the trip is p. • What is the probability distribution for the amount of money Turkish airline is going to earn for the 190 TL option? What is the same distribution for the 250 TL option? (Answer in terms of p). • What is the expected amount of money Turkish Airlines is going to earn under two options? • For what values of p does the 250 TL option yield lower expected price? What does this outcome suggest about the preferable ontion for a tynical traveler?
An air traveler from Istanbul to Ankara have two options on Turkish Airlines: a 190 TL fare with a 50% cancellation penalty, and a 250 TL fare with a 10% penalty. Assume that the probability of traveler canceling the trip is p. • What is the probability distribution for the amount of money Turkish airline is going to earn for the 190 TL option? What is the same distribution for the 250 TL option? (Answer in terms of p). • What is the expected amount of money Turkish Airlines is going to earn under two options? • For what values of p does the 250 TL option yield lower expected price? What does this outcome suggest about the preferable ontion for a tynical traveler?
Chapter8: Sequences, Series,and Probability
Section8.7: Probability
Problem 11ECP: A manufacturer has determined that a machine averages one faulty unit for every 500 it produces....
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