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MM1D2d: Use expected value to predict outcomes

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Presentation on theme: "MM1D2d: Use expected value to predict outcomes"— Presentation transcript:

1 MM1D2d: Use expected value to predict outcomes

2 Expected Value The expected value is often referred to as the “long-term” average or mean . This means that over the long term of doing an experiment over and over, you would expect this average. To find the expected value or long term average, simply multiply each value of the random variable by its probability and add the products.

3 Example: Suppose that the following game is played. A man rolls a die. If he rolls a 1, 3, or 5, he loses $3, if he rolls a 4 or 6, he loses $2, and if he rolls a 2, he wins $12. What gains or losses should he expect on average? (What is his expected value?)

4 Step 1: We must find the probabilities of each outcome. We can make a chart to help us see this. Possible Losses/Gains Probability P(losses/gains) -$3 -$2 $12

5 Step 2: Now, we multiply the probability for each outcome by the amount of money either gained or lost for that outcome. Expected value of rolling a 1, 3, or 5: ________________ Expected value of rolling a 4 or 6: ________________ Expected value of rolling a 2: _______________

6 Step 3: To find the expected value for the entire game (the answer), simply add up the expected value for each outcome. Expected Value = This means that the man playing this game is expected to lose an average of $0.17 each game he plays.

7 Example: Suppose that there is a raffle. Each ticket of the raffle cost $1.00. There are 100 tickets sold for the raffle. The top prize is $50.00; second prize receives $10.00; and third prize receives $1.00. What gains or losses should you expect on average? (What is the expected value?)

8 Step 1: Lose -$1 97/100 3rd $1 $0 1/100 2nd $10 $9 1st $50 $49
We must find the probabilities of each outcome. We can make a chart to help us see this. Possible Outcome Prize Amount Possible Losses/Gains Probability P(losses/gains) Lose -$1 97/100 3rd $1 $0 1/100 2nd $10 $9 1st $50 $49

9 Step 2: Now, we multiply the probability for each outcome by the amount of money either gained or lost for that outcome. Expected value of losing: -$1(97/100)= -$97/100= -$0.97 Expected value of 3rd: $0 (1/100) = $0 Expected value of 2nd: $10 (1/100) = $10/100 = $0.10 Expected value of 1st: $50 (1/100) = $50/100 = $0.50

10 Step 3: To find the expected value for the raffle(the answer), simply add up the expected value for each outcome. Expected Value = -$0.97 +$ $ $0.50 = -$0.37 This means that if you play this raffle you are expected to lose an average of $0.37.

11 Spinner Example What is the expected value of this spinner?
To find the expected value, add all the amount together. Then divide by the number of slices. $200 $600 $100 $400 $800 $900

12 Step 1: Add all the amounts on the spinner.
$100+$200+$400+$600+$800+$900 $3000 Now divide by 6 slices; because there is a 1/6 probability of landing on any particular piece. $3000/6 $500 The expected value of this spinner is $500.

13 Spinner Example What is the expected value of this spinner?
To find the expected value, add all the amount together. Then divide by the number of slices. -$200 -$600 -$100 $400 $800 $300

14 Step 1: Add all the amounts on the spinner together
-$100-$200+$400-$600+$800+$300 $600 Now divide by 6 slices; because there is a 1/6 probability of landing on any particular piece. $600/6 $100 The expected value of this spinner is $100.

15 Extension If you spin this same spinner 10 times, at the end what would you expect your outcome to be? How much money would you have? $100 x 10 = $1000 What is the probability of making at most $400 on a single spin? There are 5 pieces of the circle that are $400 or less. So probability is 5/6. What is the probability of making at least $300 on a single spin? There are 3 pieces of the circle that are $300 or more. So probability is 3/6.

16 Extension If you spin the spinner once and receive $300 dollars, what is the probability of a sum of $600 after the second spin? $600-$300=$300 There is only one $300 spot, so the probability is 1/6. What is the probability of spinning the spinner twice and having a sum of at least $400? First need to make a chart of all the possible sums you can get from spinning the spinner twice.

17 Extension -$600 -$200 -$100 $300 $400 $800 -$1200 -$800 -$700 -$300
-$400 $100 $600 $0 $700 $1100 $1200 $1600 What is the probability of spinning the spinner twice and having a sum of at least $400? No we have our table, count the number of spins that are $400 or more. 13 spins Total possible spins = 36 So probability is 13/36


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