Author Question: An architect is considering bidding for the design of a new shopping mall. The cost of drawing plans ... (Read 51 times)

newbem · **on:** Feb 2, 2020

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

joshbk44 · **Reply #1 on:** Feb 2, 2020

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 25% of students answer this correctly