Question: Please answer with number and not in steps, I really need help getting the answer Estimating Auto Accident Costs. Statewide Auto Insurance believes that for
Please answer with number and not in steps, I really need help getting the answer
Estimating Auto Accident Costs.
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 result 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. Statewide is interested in analyzing the total cost resulting from accidents that may occur when a teenager drives 500 trips longer than 10 minutes.
a. In addition to the cost of each accident being uncertain, the number of accidents that occur when a teenager drives 500 trips longer than 10 minutes is also uncertain. What type of random variable is appropriate for modeling the number of accidents in 500 trips?
b. Construct a simulation model incorporating the uncertainty in the number of acci-dents in 500 trips and the uncertain cost of each accident.
c. If a teenager drives 500 trips longer than 10 minutes, what is the average cost resulting from accidents? Provide a 95% confidence interval on this mean.
d. If a teenager drives 500 trips longer than 10 minutes, what is the probability that the total cost from accidents will exceed $8,000? Provide a 95% confidence interval on this proportion.
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