A Pharmaceutical Company Has Determined That If a New Cholesterol-Reducing

question 61

Multiple Choice

A pharmaceutical company has determined that if a new cholesterol-reducing drug is manufactured (introduced to the market) ,the following probability distribution will describe this drug's contribution to the company's profits during the next six months. $\begin{array} { c c } \text { Profit Contribution } & \text { Probability of Profit Contribution } \\\hline - \$ 30,000 & .20 \\\$ 50,000 & .50 \\\$ 200,000 & .30\end{array}$
The company management has decided to market this product if the expected contribution to profit for the next six months is more than $90,000.Based on the information given above,should the company begin manufacturing the new drug? Explain your answer.

• A)Yes,begin manufacturing.
• B)No,don't begin manufacturing.
• \(\mu _ { x }\)

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Definitions:

Predicted Score

An estimate based on a model or algorithm of what a variable's value will be based on other variables.

Regression Equation

An equation that describes the relationship between one dependent variable and one or more independent variables, often used to predict outcomes.

Regression Line

The line drawn based on values in a regression equation. Also known as a trend line.

Line Of Best Fit

The regression line that best fits the observed scores and minimizes the error in prediction.