An office complex leases space to various companies. The leases include energy c
ID: 3274998 • Letter: A
Question
An office complex leases space to various companies. The leases include energy costs associated with heating during the winter. To anticipate costs in the coming year, the managers developed two random variables X and Y to describe costs for equivalent amounts of heating oil (X) and natural gas (Y) in the coming year. Both X and Y are measured in dollars per Btu of heat produced. The complex uses both fuels to heating, with mu_X = mu_Y and sigma_X = sigma_Y. Mark the statement given below true or false and explain your answer. If managers believe that costs for both fuels to rise and fall together, then they should model X and Y independent. Choose the correct answer below. A. The statement is true. If the costs move separately, they should be treated as independent random variables. B. The statement is false. If the costs move separately, they should be treated as dependent random variables. C. The statement is true. If the costs move simultaneously, they should be treated as independent random variables. D. The statement is false. If the costs move simultaneously, they should be treated as dependent random variables.Explanation / Answer
The statement is false, if the costs move simultaneously, they should be treated as dependent variables.
Answer is D