00:01
Two antibiotics are available as a treatment for ear infections.
00:04
Antibiotic a is known to work 70 % of the time and it costs $70.
00:09
B works 80 % of the time and is worth costs $85.
00:14
If they work independently of each other, a health insurance company wants to know which plans of treatment to recommend for the treatment.
00:24
So let's look and see what the expected value is.
00:27
So if we start with a, then 70 % of the time, the health insurance company is going to spend just $70.
00:35
So that means 70 % of the time would spend $70, so that would be $49.
00:42
However, there's going to be another situation.
00:45
The other 30 % of the time, they're going to have to spend an additional $85 because of that not working.
00:54
So that would be 30 % of the time.
00:56
They're going to have an additional $85...