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All answers were generated using 1,000 trials and native Excel functionality.) Statewide Auto Insurance believes that...

All answers were generated using 1,000 trials and native Excel functionality.)

Statewide Auto Insurance believes that for every trip longer than 10 minutes that a teenager drives, there is a 1 in 1,000 chance that the drive will results in an auto accident. Assume that the cost of an accident can be modeled with a beta distribution with an alpha parameter of 1.5, a beta parameter of 3, a minimum value of $500, and a maximum value of $20,000. Construct a simulation model to answer the following questions. (Hint: Review Appendix 11.1 for descriptions of various types of probability distributions to identify the appropriate way to model the number of accidents in 500 trips.)

(a) If a teenager drives 500 trips longer than 10 minutes, what is the average cost resulting from accidents?
Round your answer to the nearest whole number.
Average Cost: $
Provide a 95% confidence interval on this mean.
Round your answers to the nearest whole number.
Lower Bound: $
Upper Bound: $
(b) If a teenager drives 500 trips longer than 10 minutes, what is the probability that the total cost from accidents will exceed $8,000?
Round your answer to a one decimal percentage.
Probability (Accident Cost > $8,000): %
Provide a 95% confidence interval on this proportion.
Round your answers to a one decimal percentage.
Lower Bound: %
Upper Bound: %
Math   Statistics-And-Probability   
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