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Discrete Random Variables: Means & Variances

This document discusses key concepts related to the expected value and variance of discrete random variables: 1. Expected value is used to find the average amount of money gained or lost over many trials of events with monetary outcomes, such as gambling. 2. An example is provided of calculating expected value in a lottery game to determine how much you can expect to win or lose on average. 3. The law of large numbers states that as more observations are made, the average of the results will get closer to the expected value of the population.

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6 views9 pages

Discrete Random Variables: Means & Variances

This document discusses key concepts related to the expected value and variance of discrete random variables: 1. Expected value is used to find the average amount of money gained or lost over many trials of events with monetary outcomes, such as gambling. 2. An example is provided of calculating expected value in a lottery game to determine how much you can expect to win or lose on average. 3. The law of large numbers states that as more observations are made, the average of the results will get closer to the expected value of the population.

Uploaded by

jhaselhorst
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd

Means & Variances of Discrete Random Variables

Chap. 7 Sec. 2a

Expected Value:
Used in situations involving money (gambling, business, etc.). Finds the amount of money to be gained/lost, on average, over the long run. X represents the amount of gain (negative for a loss).

Expected Value
In the Tri-State Pick 3 game you select a threedigit number. The lottery then selects a random three-digit number and if your number is selected, you win $500. If it costs $1 to play what is your expected value?

Using Graphing Calculator Example 7.7 pg. 485


STEPS
1.
1. 2.

Input Data
L1 = X values L2 = Probabilities

2. 3. 4.

1-Var Stats L1,L2 x = mean sx = standard deviation (square this value to get variance)

Probability Distributions & Means


Law of Large Numbers:
As the number of observations drawn increases, the mean of the observed values eventually approaches the mean of the population and stays close to that value. Flipping a Coin example: How many heads would you expect to get if we flipped a coin 7 times?
Lets Simulate!

law of small numbers


Say we flip a coin four times and all four flips result in heads? Which is more likely to occur next, heads or tails? Remember probability only describes the outcomes of an event in the long run!

Pg. 486 7.24-7.28 all pg. 491 7.32-7.34 all


Homework Assignment

BRING YOUR TEXTBOOK TOMORROW!

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