Question

The employees of a firm that does asbestos cleanup are being tested for indications of asbestos in their lungs. The firm is asked to send four employees who have positive indications of asbestos to a medical center for further testing. Suppose 40% of the employees have positive indications of asbestos in their lungs. (Write down the pmf, write down mean and variance formulas if possible)

a. Suppose that each test costs $40. What is the expected cost of this entire process? What is the standard deviation?

b. Suppose that the firm is trying to figure out how much money they need to set aside in advance. The firm wants to set aside enough money that they can be 90% sure that it will cover the cost of the tests. Use Chebyshev’s Inequality to calculate this amount.

Answer 1