Question 2 First attempt

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An electronics retailer offers an optional protection plan for a mobile phone it sells. Customers can choose to buy the
Report: Mean (expected value) of a discrete random variable
protection plan for $100, and in case of an accident, the customer pays a $50 deductible and the retailer will cover the 100%
rest of the cost of that repair. The typical cost to the retailer is $200 per repair, and the plan covers a maximum of 3
repairs. 1/3 Definition and formula

Let X be the number of repairs 1 a randomly chosen customer uses under the protection
Incorrect 2 let F be the retailer's
plan, and InCorrect 3
the case of a discrete random variable, expected value or meanIncorrect
— denoted as E(X) or μX — is ​

profit from one of these protection plans. Based on data from all of its customers, here are the probability distributions the long-run average outcome. To find expected value, take each value, multiply it by its respective
of X and F : Rodrigo plans to buy packs of baseball cards until he probability,
An electronics retailer offers an optional protection plan and add upisallplaying
Cora the products.
a game that involves flipping three coins
gets the card of his favorite player, but he only has for a mobile phone it sells. Customers can choose to buy at once. Let the random variable H be the number of
enough money to buy at most three packs. Suppose E(X)
the protection plan for $100, and in case of an accident, = μX = coins​ + xland
x1 p1 that
​

2 p2 + ... + x"heads".
showing
​ ​

n pn Here is the probability

​ ​

X = # of repairs 0that each1 pack has2 a 10% chance

3 of containing the card the customer pays a $50 deductible and the retailer will distribution for H :
= ∑ xi p i
Rodrigo is hoping for. cover the rest of the cost of that repair. The typical cost
F =  retailer profit $100 −$50 −$200 −$350
to the retailer is $200 per repair, and the plan covers a
​ ​

H = # of heads 0 1 2 3
Probability 0.90 0.07below 0.02
The table 0.01
displays the probability distribution of maximum of 3 repairs.
X , the number of packs of cards Rodrigo buys.
2/3 Calculations P (H) 0.125 0.375 0.375 0.125
Find the expected value of the retailer's profit per protection plan sold. Let X be the number of repairs a randomly chosen
We're only concerned about the random variable F in this case:
customer uses under the protection plan, and let F be Find the expected value of the number of coins that land
X = # of packs 1 2 3 the retailer's profit from one of these protection plans. showing "heads".
E(F ) = dollars
P (X) 0.10 0.09 0.81 X = # of repairs
Based on data from all of its customers, here are the 0 1 2 3
probability distributions of X and F : E(H) = "heads"
F =  retailer profit $100 −$50 −$200 −$350
Calculate the mean of X .
Probability 0.90 0.07 0.02 0.01
X = # of repairs 0 1 2
μX = packs
F =  retailer profit $100 −$50 E(F−)
−$200
Probability 0.90 0.07 0.02
= μF ​

4 Correct
Find the expected value of the retailer's profit per
protection plan sold. = 100(0.90) + (−50)(0.07) + (−200)(0.02) + (−350)(0.01)
An electronics retailer offers an optional protection plan
for a mobile phone it sells. Customers can choose to buy E(F ) = dollars
the protection plan for $100, and in case of an accident, = 90 − 3.5 − 4 − 3.5
the customer pays a $50 deductible and the retailer will
cover the rest of the cost of that repair. The typical cost = 79
to the retailer is $200 per repair, and the plan covers a
maximum of 3 repairs. 3/3 The answer
Let X be the number of repairs a randomly chosen The expected value is E(F ) = 79 dollars.
customer uses under the protection plan, and let F be
the retailer's profit from one of these protection plans.
Based on data from all of its customers, here are the
probability distributions of X and F :
 X = # of repairs 0 1 2
Question 2 First attempt
F =  retailer profit $100 −$50 −$200 −
Probability 0.90 0.07 0.02
An electronics retailer offers an optional protection plan for a mobile phone it sells. Customers can choose to buy the Responses Draw Hints
protection plan for $100, and in case ofthe
Calculate an accident,
mean of X . customer pays a $50 deductible and the retailer will cover the
the
rest of the cost of that repair. The typical cost to the retailer is $200 per repair, and the plan covers a maximum of 3
repairs.
μX = repairs
1/3 Definition and formula

Let X be the number of repairs a randomly chosen customer uses under the protection plan, and let F be the retailer's In the case of a discrete random variable, expected value or mean — denoted as E(X) or μX — is ​

profit from one of these protection plans. Based on data from all of its customers, here are the probability distributions the long-run average outcome. To find expected value, take each value, multiply it by its respective
of X and F : probability, and add up all the products.

E(X) = μX = x1 p1 + x2 p2 + ... + xn pn
​ ​ ​ ​ ​ ​

X = # of repairs 0 1 2 3
F =  retailer profit $100 −$50 −$200 −$350 = ∑ xi p i ​ ​

Probability 0.90 0.07 0.02 0.01

2/3 Calculations
Find the expected value of the retailer's profit per protection plan sold.
We're only concerned about the random variable F in this case:

E(F ) = dollars
X = # of repairs 0 1 2 3
F =  retailer profit $100 −$50 −$200 −$350
Probability 0.90 0.07 0.02 0.01

E(F )

= μF ​

= 100(0.90) + (−50)(0.07) + (−200)(0.02) + (−350)(0.01)

= 90 − 3.5 − 4 − 3.5

= 79

3/3 The answer

The expected value is E(F ) = 79 dollars.