The maximum patent life for a new drug is 17 years. Subtracting the length of time required by the FDA for testing and approval of the drug provides the actual patent life for the drug – that is, the length of time the company has to recover research and development costs and to make a profit. The distribution of the lengths of actual patent lives for new drugs is given below: (Please neatly show your work)
3 4. 5 6 7 8 9 10 11 12 13 0.03 0.05 0.07 0.10 0.14 0.20 0.18 0.12 0.07 0.03 0.01
A) Find the mean and variance for the patent life for a new drug.
B) What is the probability that the patent falls within two standard deviations of the mean? How does this compare to Tchebycheff’s rule?