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Lecture 13

# ECON 2209 Lecture 13: 22February_EconStats_Karagodsky Premium

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School
Boston College
Department
Economics
Course
ECON 2209
Professor
Karagodsky
Semester
Fall

Description
EconStatistics February 22 2017 1 Cupcake Problem Sell for 5 Costs 2 per cupcake to make must make them in advance Demand is usually normally distributed about N(500, 400) P(X > x )0P C) + P(X < x )(0C) P(X x )(5 2) 2P(X < x ) 0 0 3 5P(X < x 0 = 0 3 P(X X )0= 5 solve for 0 E[Profit] = Pr(x x 0(p c) + Pr(x < x0)(c) = 3Pr(x x 0 2Pr(x < x 0 = 3[1 P(x < x 0] 2P(x < x 0 = 305P(x < x 0 = 0 3 P(X < x )0= = :6 5 x0 500 P(Z < p ) = :6 400 x0 500 Z 0 20 = :25 (From the chart using .6 to trace back to the Z) X 0 20(:25) + 500 = 505 1
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