ECON 221 Lecture Notes - Lecture 4: Standard Deviation

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If you have a probability distribution table, for example. 0. 60 the expected value, which is the mean. The variance of the cost or the standard deviation of the cost: the expected value formula is: e(x)= [x * p(x)] In this table case, the formula is e(x)= (1*0. 11) + (2*0. 24) + (3*0. 47) + (4*0. 60) 2) the variance formula is v(x)= [(x^2) * p(x)] - [e(x)]^2. V(x)= [(1^2)*(0. 11) + (2^2) * (0. 24) + (3^2) * (0. 47) + (4^2) * (0. 60)] - (4. 4)^2. 3) the standard deviation formula is the same as the variance one except there is the. In this table case, the formula is square root on the whole formula s(x)= [(x^2) * p(x)] - [e(x)]^2. = [(0^2)*(0. 11) + (1^2) * (0. 24) + (2^2) * (0. 47) + (3^2) * (0. 60)] - (4. 4)^2. 4) if the question tells you that each delay cost you 100$ The average cost formula is e(y) = cost * e(x) E(x) is the expected value found earlier.

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