Question

5. (5 marks) A tour bus can hold 25 tourists. Tickets costs $50 and are non-refundable. From previous experience, the tour operator supposes there is a 10% chance of a no-show, independent of other ticket purchasers. The tour operator justifies that if there is a 10% (1 in 10) chance of a no show, he should expect that out of 25 tickets sold, on average 2.5 will not show up. In which case, the tour operator decides to sell 27 tickets. If a tourist shows up and the bus is full, the tour operator will refund their $50 for the ticket and give them an additional value as compensation. If the tour operator sells 27 tickets for a tour, what is the maximum they can offer in compensation so that on average he will expect to make more than $1250 (the amount he would make if he sold 25 tickets)?

Answer 1

b- probabiuby no chaus a pexticulor ticket 23 PC1 mo shous): P(26 present) 0.17445 P( 2 or more no shoua)- r (25 on less preset4o Sf.χ be the amount .of cowpensarm ,tten Por 25 or ess shouw 07640 0.10.0S3IS for 26 shoeo, Given ECx 1256 1335.4625-0:29 075ズ> 1250う ong 07SX〈F5-962S" ''|χ< 293.941