The condenser motor in an air conditioner costs $300 to replace, but a home air-conditioning service will guarantee to replace it free when it burns out if you will pay an annual insurance premium of $25. The life span of the motor is an exponential random variable with an expected life of 10 years. Should you take out the insurance for the first year? [Hint: Consider the random variable Y such that Y = 300 if the motor burns out during the year and Y = 0 otherwise. Compare E(Y ) with the cost of 1 year’s insurance.]
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
The condenser motor in an air conditioner costs $300 to replace, but a home air-conditioning service will guarantee to replace it free when it burns out if you will pay an annual insurance premium of $25. The life span of the motor is an exponential random variable with an expected life of 10 years. Should you take out the insurance for the first year? [Hint: Consider the random variable Y such that Y = 300 if the motor burns out during the year and Y = 0 otherwise. Compare E(Y ) with the cost of 1 year’s insurance.]
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