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

Warm-Up: Direction and Single-Option Expected Value

These problems review computing one expected value and stating the cost/payoff direction.

You are comparing two strategies by their expected annual cost (in dollars). Strategy X has an expected cost of $\text{\char"0024}950$ and Strategy Y has an expected cost of $\text{\char"0024}1{,}237.50$ . Which strategy should you recommend, and why?

Strategy X, because for an expected COST, lower is better.

Strategy Y, because a higher expected value is always better.

Strategy Y, because it costs more, so it must offer more.

Neither — expected costs cannot be compared directly.