Suppose that X and Y are random variables such that E(X) = 4, E(Y) = 2 and var(X) = var(Y) = 4. Let Z=X+Y.
Find E(Z) (1 dp)
Assuming that X and Y are statistically independent find var(Z) (1 dp)
Assuming that cov(X,Y) = 2 find var(Z) (1dp)
The total profit of a firm is given by
Profit = Total Revenue - Total Cost