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Back to Analyze decisions and strategies using probability — Problem 1 · Task Set 34

Exercises: Analyze Decisions and Strategies Using Probability

Work through each section in order. For testing problems, build the two-way table over the stated population and compute the decision-relevant quantity by counting. Remember the difference between a test's accuracy P(positive | disease) and the decision-relevant P(disease | positive). For strategy problems, account for how a choice changes ALL of the probabilities, not just the one you want. Write explanation answers in complete sentences and name your assumptions.

Grade 12·20 problems·~35 min·Common Core Math - HS Statistics and Probability·group·hss-md-b-7
Work through problems with immediate feedback
A

Fluency Practice

Compute the decision-relevant quantity in each problem.

1.

Two insurance choices have the SAME expected annual cost of $500\text{\char"0024}500. Plan X costs exactly $500\text{\char"0024}500 every year. Plan Y costs $0\text{\char"0024}0 with probability 0.980.98 but $25,000\text{\char"0024}25{,}000 with probability 0.020.02. What is the largest possible single-year cost (the worst case) under Plan Y, in dollars?