An individual who has automobile insurance from a certain

Chapter 4, Problem 30E

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QUESTION:

An individual who has automobile insurance from a certain company is randomly selected. Let Y be the number of moving violations for which the individual was cited during the last 3 years. The pmf of Y is ...

a. Compute E(Y).

b. Suppose an individual with Y violations incurs a surcharge of \($100Y^2\). Calculate the expected amount of the surcharge.

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QUESTION:

An individual who has automobile insurance from a certain company is randomly selected. Let Y be the number of moving violations for which the individual was cited during the last 3 years. The pmf of Y is ...

a. Compute E(Y).

b. Suppose an individual with Y violations incurs a surcharge of \($100Y^2\). Calculate the expected amount of the surcharge.

ANSWER:

Answer: Step1: An individual who has automobile insurance from a certain company is randomly selected. Let Y be the number of moving violations for which the individual was cited during the last 3 years. The pmf of Y is Y 0 1 2 3 p(y) 0.6 0.25 0.

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