Expected Value Practice

Front

What is Expected Value?

Back

Expected Value (EV) is a calculated average of all possible outcomes of a random variable, weighted by their probabilities. It represents the long-term average if the experiment were repeated many times.

Front

How do you calculate Expected Value?

Back

To calculate Expected Value, multiply each possible outcome by its probability and sum all these products: EV = Σ (outcome × probability).

Front

What is the Expected Value of rolling a standard die with the following payouts: $12 for a six, $6 for a one, and $0 for any other number?

Back

$3.

Front

In a community where 30% of households have 1 child, 43% have 2 children, and 27% have 3 children, what is the expected number of children in a randomly selected household?

Back

1.97.

Front

What is the average number of customers expected to make a purchase during the first hour if the probability distribution shows an average of 3.0 customers?

Back

3.0 customers.

Front

How do you find the Expected Value of a random variable with a probability distribution?

Back

Multiply each value by its probability and sum the results.

Front

What is the Expected Value of the inseam length of jeans with the following probabilities: 30" (35%), 32" (20%), 34" (10%), 36" (35%)?

Back

32.9 inches.

Front

If a car dealer buys hybrids for $21,000 and sells them for $24,500, what is the expected profit per car?

Back

$3,500.

Front

What is the formula for calculating profit?

Back

Profit = Revenue - Cost.

Front

What does a probability distribution represent?

Back

A probability distribution shows all possible outcomes of a random variable and their associated probabilities.