4. It costs $50 to inspect a certain component of a machine. If a
defective component is installed, it costs $1,000 to repair the
resulting damage to the machine. Is it more profitable to install the
component without inspection if it is known that
(a) 4% of all components produced are defective;
(b) 5% of all components produced are defective
(c) 10% of all components produced are defective?

Suppose x is fraction of defective components
and we install N components

Scenario 1:
Install without Inspection
Cost is xN*$1,000

Scenario 2:
Install with Inspection
Cost is N * $50

so a) Scenerio 1 best
b) Scenarios 1 and 2 Same
c) Scenario 2 best