Assignment:
Management of an airline knows that 0.5% of the airline’s passengers lose their luggage on domestic flights. Management also knows that the average value claimed for a lost piece of luggage on domestic flights is $600. The company is considering increasing fares by an appropriate amount to cover expected compensation to passengers who lose their luggage. By how much should the airline increase fares? Why? Explain, using the ideas of a random variable and its expectation.
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.