Question

Suppose a bounty hunter captures a certain type of fugitive 62% of the time. On average, the apprehension of this type of criminal costs him $9,000 in expenses, but if he captures the criminal he receives a bounty (monetary reward) of $50,000.

Based ONLY on this information, should the bounty hunter take the job?
A) The expected value is $22,000 -- the bounty hunter should take the job.
B) The expected value is $27,580 -- the bounty hunter should take the job.
Eliminate
C) The expected value is −$22,000 -- the bounty hunter should not take the job.
D) The expected value is −$27,580 -- the bounty hunter should not take the job.

Answer 1

Hi There!

Question - Suppose a bounty hunter captures a certain type of fugitive 62% of the time. On average, the apprehension of this type of criminal costs him $9,000 in expenses, but if he captures the criminal he receives a bounty (monetary reward) of $50,000.

Based ONLY on this information, should the bounty hunter take the job?

Solution:

62% = 0.62

50,000 * 0.62 = 31,000

31,000 - 9,000 = 22,00

Answer:

A) The expected value is $22,000 -- the bounty hunter should take the job.

Hope This Helps :)

Answer 2

A) The expected value is $22,000 -- the bounty hunter should take the job.

Explanation:

The expected value is probability*reward- cost

Expected value = .62* 50000 - cost

31000- 9000

22000