3.

Let F be the final cost (a random variable), and C be the estimated cost (a constant), hence

X=F/C
is a random variable.

(a) To satisfy the normalization condition,

a a
3 ⎡ − 3⎤ 3
∫
1
x 2
dx = ⎢ ⎥ = 3 − = 1 ,
⎣ x ⎦1 a
hence
a = 3/2 =1.5

(b) The given event is “F exceeds C by more than 25%”, i.e. “F > 1.25C”, i.e. “F / C > 1.25”,
whose probability is
∞
P(X > 1.25) = ∫f
1.25
X ( x) dx

1.5 1.5
3 ⎡ − 3⎤
= ∫
1.25
x 2
dx = ⎢ ⎥
⎣ x ⎦ 1.25
= -2 – (- 2.4) = 0.4

(c) The mean,

1.5
dx = [3 ln x ]1 ≅ 1.216,
3
∫x x
1.5
E(X) = 2
1
while
1.5
3
∫x
2 2
E(X ) = dx = 3(1.5 – 1) = 1.5,
1
x2
with these, we can determine the variance
2 2
Var(X) = E(X ) – [E(X)]
2
= 1.5 – 1.216395324 = 0.020382415

∴σX = 0.020382415 ≅ 0.143