Insurance The Blue Sky Flight Insurance Company insures passengers against air disasters, charging a prospective passenger $20 for coverage on a single plane ride. In the event of a fatal air disaster, it pays out $100,000 to the named beneficiary. In the event of a nonfatal disaster, it pays out an average of $25,000 for hospital expenses. Given that the probability of a plane’s crashing on a single trip 37 is .00000087, and assuming that a passenger involved in a plane crash has a .9 chance of being killed, determine the profit (or loss) per passenger that the insurance company expects to make on each trip. [ hinT: Use a tree to compute the probabilities of the various outcomes.]
Insurance The Blue Sky Flight Insurance Company insures passengers against air disasters, charging a prospective passenger $20 for coverage on a single plane ride. In the event of a fatal air disaster, it pays out $100,000 to the named beneficiary. In the event of a nonfatal disaster, it pays out an average of $25,000 for hospital expenses. Given that the probability of a plane’s crashing on a single trip 37 is .00000087, and assuming that a passenger involved in a plane crash has a .9 chance of being killed, determine the profit (or loss) per passenger that the insurance company expects to make on each trip. [ hinT: Use a tree to compute the probabilities of the various outcomes.]
Solution Summary: The author calculates the expected amount of profit or loss per passenger by the Blue Sky Flight Insurance company if they ensure passengers against air disasters.
Insurance The Blue Sky Flight Insurance Company insures passengers against air disasters, charging a prospective passenger $20 for coverage on a single plane ride. In the event of a fatal air disaster, it pays out $100,000 to the named beneficiary. In the event of a nonfatal disaster, it pays out an average of $25,000 for hospital expenses. Given that the probability of a plane’s crashing on a single trip37 is .00000087, and assuming that a passenger involved in a plane crash has a .9 chance of being killed, determine the profit (or loss) per passenger that the insurance company expects to make on each trip. [hinT: Use a tree to compute the probabilities of the various outcomes.]
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Discrete Distributions: Binomial, Poisson and Hypergeometric | Statistics for Data Science; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=lHhyy4JMigg;License: Standard Youtube License