Let X denote the total medical expenses (in 1000s of dollars) incurred by specific individual during given year. X is approximated by continuous distribution with a pdf of: f(x)={c(x+4)^(-4) ,x>=0
Determine c such that f(x) is a legitimate probability density function.
Determine the standard deviation of total medical expenses per individual?
A person is "flagged" by the insurance company if their expenses are greater than 75% of all other individuals with this policy. What amount of total expenses does an individual need to exceed to be flagged? Find the 75th percentile.
For this policy, the insurance company will pay 90% of all medical expenses. If the total cost incurred for an individual in a year is denoted by Y. What is the expectation Y? Meaning, how much should the insurance company expect to pay for a single individual?