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Suppose that the fuel price at a specific gas station consists of : A fixed government fuel...

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Basic Math

Suppose that the fuel price at a specific gas station consistsof :

A fixed government fuel excise of $0.416/L

Wholesale costs for supplier, which average $0.712/L, with avariance of 0.10.

Retail costs (including profit margin) at an average of$0.212/L, with a variance of 0.0012.

a) Find the average total fuel cost on any given day

b) Given that wholesale and retail costs have a correlation of0.7, find the variance in total fuel price

c) Assuming that the total fuel price is normally distributed,what is the probability of fuel being priced at less than $1/L onany given day?

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