Question

There is a 1 percent chance that you will have healthcare bills of $200,000; a 20 percent chance that
you will have bills of $10,000; a 59 percent chance that you will have bills of $1,000; and an 11 percent
chance of having bills of $0. Your expected healthcare bills are?

a. $22,590.
b.$22,000.
c.$20,590.
d. $19,590.

Answer 1

Answer:

$2,790

Explanation:

Healthcare spending = (1%)*($200,000)+ (20%)*($10,000)+(59%)*($1000)+ (11%)*($0)

 = (1/100)($200,000)+(20/100)($10,000)+(59/100)($1000)+(11/100)*($0)

= $2000+$2000+$590+0

= $2,790