Assume that you assign the following subjective probabilities for your final grade in your econometrics course (the standard GPA scale of 4-A to 0-F applies): Probability 0.20 0.50 0.20 0.08 0.02 Grade The expected value is_____________.A. 3.5 B. 3.25. C. 2.78.D. 3.0

Answer :

Answer:

[tex] E(X) = 4*0.2 +3*0.5+ 2*0.2 +1*0.8+ 0*0.02= 2.78[/tex]

So then the best answer for this case would be:

C. 2.78

Step-by-step explanation:

For this case we have the following probabability distribution function given:

Score         P(X)

A= 4.0       0.2

B= 3.0       0.5

C= 2.0       0.2

D= 1.0        0.08

F= 0.0       0.02

______________

Total          1.00

The expected value of a random variable X is the n-th moment about zero of a probability density function f(x) if X is continuous, or the weighted average for a discrete probability distribution, if X is discrete.

If we use the definition of expected value given by:

[tex] E(X) = \sum_{i=1}^n X_i P(X_I)[/tex]

And if we replace the values that we have we got:

[tex] E(X) = 4*0.2 +3*0.5+ 2*0.2 +1*0.8+ 0*0.02= 2.78[/tex]

So then the best answer for this case would be:

C. 2.78

Based on the information given the expected value is: C. 2.78.

Expected value

Since the standard GPA scale of 4-A to 0-F applies, thus the expected value is calculated as:

Expected value:

Expected value=(4×0.20)+ (3× 0.50) +(2× 0.20)+(1× 0.08)+(0× 0.02)

Expected value=0.8+1.5+0.4+0.08+0

Expected value=2.78

Inconclusion the expected value is: C. 2.78.

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