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2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the $1,500 for a minor accident and $8,000 for a major accident. The probability of a company will раy teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X represent the amount that the insurance company pays out to a customer during the year. a) Make a table showing the distribution of X. P(X = x) b) What is the expected value of X? c) What does that mean for the insurance company?

2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the $1,500 for a minor accident and $8,000 for a major accident. The probability of a company will раy teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X represent the amount that the insurance company pays out to a customer during the year. a) Make a table showing the distribution of X. P(X = x) b) What is the expected value of X? c) What does that mean for the insurance company?

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the pay $1,500 for a minor accident and $8,000 for a major accident. The probability of a company will teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X represent the amount that the insurance company pays out to a customer during the year. a) Make a table showing the distribution of X. P(X = x) b) What is the expected value of X? c) What does that mean for the insurance company? d) What is the standard deviation of X?
Transcribed Image Text:2) An insurance company charges $900 annually for auto policies for teenagers. The policy specifies the pay $1,500 for a minor accident and $8,000 for a major accident. The probability of a company will teenager having a minor accident during the year is 0.15, and of having a major accident is 0.05. Let X represent the amount that the insurance company pays out to a customer during the year. a) Make a table showing the distribution of X. P(X = x) b) What is the expected value of X? c) What does that mean for the insurance company? d) What is the standard deviation of X?
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