(Scenario: Health Costs)Use Scenario: Health Costs

question 113

Multiple Choice

(Scenario: Health Costs) Use Scenario: Health Costs.Suppose that Alan decides to change his habits dramatically and,as a result,decreases the probability of his developing a health problem such that he now has a 20% chance of becoming ill.What is the expected value of Alan's health costs now? Scenario: Health Costs
Alan is hoping for a healthy year,meaning that he would have zero health costs.Given his habits,there is a 40% chance that Alan will develop a health issue resulting in $50,000 in health costs.Assume these are the only two conditions that could exist for Alan in the coming year.

• A)$0
• B)$10,000
• C)$20,000
• D)$2,000

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Definitions:

Variable Sample Size

A sampling method where the size of the sample can change based on the experiment or study being conducted.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values.

Samples

A subset of a population that is used for analyzing and drawing conclusions about the entire population.