Suppose That in One Area in California, 40% of All

Essay

Suppose that in one area in California, 40% of all homeowners are insured against earthquake damage. Four homeowners are to be selected at random; let X denote the number among the four who have earthquake insurance.
a. Find the probability distribution of X. [Hint: Let S denote a homeowner who has insurance and F one who does not. Then one possible outcome is SFSS, with probability (.3)(.7)(.3)(.3) and associated X value 3. There are 15 other outcomes.]
b. What is the most likely value for X?
c. What is the probability that at least two of the four selected have earthquake insurance?