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Olivia used her past health history and information about her doctor visits to create this table to compare health costs with and without insurance

What is the expected value of each option?

The expected value of healthcare without insurance is:

The expected value of healthcare with insured is:

Olivia used her past health history and information about her doctor visits to create this table to compare health costs with and without insurance What is the class=

Respuesta :

Considering a discrete distribution, the expected values for each case are given by:

  • Without insurance: $437.25.
  • With insurance: $1,636.40.

What is the mean of a discrete distribution?

The expected value of a discrete distribution is given by the sum of each outcome multiplied by it's respective probability.

Without insurance, the distribution is given by:

  • P(X = 1050) = 0.32.
  • P(X = 225) = 0.45.

Hence:

E(X) = 0.32 x 1050 + 0.45 x 225 = $437.25.

With insurance, the distribution is given by:

  • P(X = 75) = 0.32.
  • P(X = 72) = 0.45.

Adding to the cost of insurance, we have that:

E(X) = 1580 + 75 x 0.32 + 72 x 0.45 = $1,636.40.

More can be learned about the expected value of a discrete distribution at https://brainly.com/question/24245882

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