A Car Dealership Has Found That the Length of Time

question 91

Essay

A car dealership has found that the length of time before a major repair is required on the new cars it sells is normally distributed, with a mean of 36 months and a standard deviation of 9 months. If the dealer wants only 5% of the cars to fail before the end of the warranty period, for how many months should the cars be guaranteed?

---

Definitions:

Utility Function

A mathematical representation of how consumers rank different bundles or combinations of goods and services according to the level of satisfaction or utility those combinations provide.

Paasche Price Index

An economic measure that calculates the change in the cost of acquiring a given basket of goods and services in the current period compared to a base period, using the current period quantities as weights.

Doggerel

A term used to describe poetry that is irregular in rhythm, rhyme, or is of a trivial or low quality.

WARP

Stands for the Weak Axiom of Revealed Preference, a criterion used in consumer choice theory to assess whether observed choices are consistent with rational behavior.