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Author Question: An architect is considering bidding for the design of a new shopping mall. The cost of drawing plans ... (Read 60 times)

newbem

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Question 1

The table shows claims and their probabilities for an insurance company.

Amount of Claim Probability
$0 0.60
$50,000 0.25
$100,000 0.09
$150,000 0.04
$200,000 0.01
$250,000 0.01


(a) Calculate the expected value.
(b) How much should the company charge as an average premium so that it breaks even on its claim costs?  
(c) How much should the company charge to make a profit of per policy?
◦ (a) $32,000 (b) $16,000 (c) 16,090
◦ (a) $32,000 (b) $16,,000 (c) 32,090
◦ (a) $32,000 (b) $32,000 (c) 32,090
◦ (a) $16,000 (b) $32,000 (c) 32,090

Question 2

An architect is considering bidding for the design of a new shopping mall.  The cost of drawing plans and submitting a model is $10,000.  The probability of being awarded the bid is 0.12, and anticipated profits are $100,000, resulting in a possible gain of this amount minus the $10,000 cost for plans and a model.  What is the expected value in this situation?
◦ $12,000
◦ $10,800
$2000
◦ $11,000


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Marked as best answer by newbem on Feb 2, 2020

joshbk44

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newbem

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Reply 2 on: Feb 2, 2020
Great answer, keep it coming :)


raili21

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Reply 3 on: Yesterday
Gracias!

 

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