(5) An oil exploration firm, is formed with enough capital to names ten explorat

Question

(5) An oil exploration firm, is formed with enough capital to names ten explorations. The probability of a particular exploration being successful is 0.1. Assume that the explorations are Independent. Find the mean and variance of the number of successful explorations. (6) Refer to the above problem. Suppose the firm has a fixed cote in preparing equipment prior to doing its first exploration. If each successful exploration coats $ 30,000 and each unsuccessfull exploration costs $15,000, find the expected total coat to the firm for Its ten explorations.

Explanation / Answer

5) it follows bionomial distribution with p=0.1 n=10

then

expectation=n*p=10*0.1=1

varience=n*p*q=10*0.1*0.9=0.9

6)

expected number of successful exploration=10*0.1=1

expected number of unsuccessful exploration=9

then expected cost=20000+30000*1+15000*9=20000+30000+135000=185000

expected cost=$185000

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