SOLUTION: Is this correct? I want to check my answer. Winston used his past health history and information about his doctor visits to create this table to compare health costs with and wi

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Question 1185318: Is this correct? I want to check my answer.
Winston used his past health history and information about his 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 health care without insurance is $(1,031.25)
The expected value of health care with insurance is $(169.25).
The question is provided in the link here: https://i.imgur.com/H0SoqJn.png

Answer by Theo(13342)   (Show Source): You can put this solution on YOUR website!
i get the following, based on the information provided.

the information provided is:

      description of service   probability of needing   cost with insurance   cost without insurance
           
           annual premium                  100%                   1580                  0
           5 doctor visits                 45%                    125                   175
           medications                     75%                    75                    75



the cost with insurance is 100% * 1580 + 45% * 125 + 75% * 75 = 1692.5

the cost without insurance is 100% * 0 + 45% * 1750 + 75% * 325 = 1031.25

i believe your forgot to include the cost of the premium in your with insurance cost.

you have:

cost with insurance = 169.25
cost without insurance = 1031.25

it looks to me like you did it right, but messed up the cost with insurance somehow.

instead of 1692.50, you have 169.25

what you have is 1692.5 divided by 10 = 169.25, which is incorrect.

multiplying by percents can be tricky.

when youi multiply by percent, you are multiplying by the percent number divided by 100.

multiplying by 100% is the same as multiplying by 100/100 = 1, so 100% * 1580 is equal to 1580.

the percent in 100% means 100 per 100.
if you want per 1, you have to divided by 100.

your mistake could have been a typo, or it could have been an error in the calculation.

either way, the correct answer is 1692.5, not 169.25.

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