Back to Evaluate and compare strategies using expected values — Problem 1 · Task Set 32
Exercises: Evaluate and Compare Strategies Using Expected Values
Work through each section in order. For every comparison, FIRST state the direction: an expected COST means lower is better; an expected PAYOFF means higher is better. Model each strategy as its own distribution, compute its expected value, then compare the totals. For insurance problems, remember expected cost = premium + expected out-of-pocket. Show your arithmetic.
Grade 11·22 problems·~35 min·Common Core Math - HS Statistics and Probability·standard·hss-md-b-5b
Work through problems with immediate feedback
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Fluency Practice
Compute each strategy's expected value and compare. State the direction.
1.
An auto policy has a annual premium and a deductible paid per accident. For this driver the chance of having at least one accident (which triggers the full deductible) is . The expected annual cost is the premium plus the expected out-of-pocket payment. Compute the expected annual cost, in dollars.