Back to Evaluate and compare strategies using expected values — Problem 4 · 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

Fluency Practice

Compute each strategy's expected value and compare. State the direction.

For a given driver, Policy A has an expected annual cost of $\text{\char"0024}1{,}237.50$ and Policy B has an expected annual cost of $\text{\char"0024}950$ . Which policy do you recommend?

Policy B, because $\text{\char"0024}950 < \text{\char"0024}1{,}237.50$ and lower expected cost is better.

Policy A, because it has a smaller deductible.

Policy A, because a higher cost gives better coverage.

Cannot decide without knowing each premium.