Concept explainers
a.
To construct: A table of the
a.
Explanation of Solution
Given:
Amount spend on insurance = $300
Amount insurance will pay if fire destroys home = $200000
Probability that fire will destroy the home = 0.0002
Calculation:
Using the provided information, the probability distribution is:
Y | 300-200000 | 300 |
Probability | 0.0002 | 1-0.0002 |
Thus, the probability distribution is:
Y ($) | 199700 | 300 |
Probability | 0.0002 | 0.9998 |
b.
To find: The expected value and interpret it
b.
Answer to Problem 10E
The expected value is $260
Explanation of Solution
Calculation:
The expected value can be calculated as:
The expected value is $260.
The expected gain for the insurance company per homeowner is $260.
Chapter 6 Solutions
The Practice of Statistics for AP - 4th Edition
Additional Math Textbook Solutions
Introductory Statistics
Elementary Statistics: Picturing the World (6th Edition)
Elementary Statistics: Picturing the World (7th Edition)
Introductory Statistics (2nd Edition)
Statistics: The Art and Science of Learning from Data (4th Edition)
- MATLAB: An Introduction with ApplicationsStatisticsISBN:9781119256830Author:Amos GilatPublisher:John Wiley & Sons IncProbability and Statistics for Engineering and th...StatisticsISBN:9781305251809Author:Jay L. DevorePublisher:Cengage LearningStatistics for The Behavioral Sciences (MindTap C...StatisticsISBN:9781305504912Author:Frederick J Gravetter, Larry B. WallnauPublisher:Cengage Learning
- Elementary Statistics: Picturing the World (7th E...StatisticsISBN:9780134683416Author:Ron Larson, Betsy FarberPublisher:PEARSONThe Basic Practice of StatisticsStatisticsISBN:9781319042578Author:David S. Moore, William I. Notz, Michael A. FlignerPublisher:W. H. FreemanIntroduction to the Practice of StatisticsStatisticsISBN:9781319013387Author:David S. Moore, George P. McCabe, Bruce A. CraigPublisher:W. H. Freeman