Question
Answer all questions with detailed explanation A random customer's utility of consuming a bakery sample is normally distributed as U i ~N(1.6, 4.2), where is
Answer all questions with detailed explanation
A random customer's utility of consuming a bakery sample is normally distributed as Ui~N(1.6, 4.2), where is the customer i's utility, which has normal distribution with mean 1.6 and variance 4.2.
If the customer's utility is positive, she will buy the bakery (food). Otherwise, she will not buy.
(a) What is the customer's probability of buying the new bakery? Namely, (>0)P(Ui>0).
(b) What is the probability that 3 independently visiting customers all choose to buy this new bakery?
(c) A crazy but talented baker changed the recipe to increase the utility's mean by 1, but also double its variance. Can this new recipe increase the purchasing probability?
Please provide explanation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started