DreamTheater
05-28-2011, 11:03 AM
Why, in the following problem's solution, is the formula E(X) - 500P(X=1) -1000(PX>=2) ? I understand everything but the 1000P(X>=2). It is throwing me off and I have the same issue with several other problems.
Thanks in advance.
A helicopter tour company purchases insurance for lost business due to rain in the month of May. The insurance pays 500 for each day in excess of 2 days that the helicopters are grounded due to rain. The number of days, , the helicopters are grounded is binomial with and . Find the expected insurance payment under this policy.
Answer: 145.25.
Thanks in advance.
A helicopter tour company purchases insurance for lost business due to rain in the month of May. The insurance pays 500 for each day in excess of 2 days that the helicopters are grounded due to rain. The number of days, , the helicopters are grounded is binomial with and . Find the expected insurance payment under this policy.
Answer: 145.25.