Question

In a game of chance, the probability of winning a $50 prize is 40 percent, and the probability of winning a $100 prize is 60 percent. what is the expected value of a prize in the game

Answer 1

Expected value
E[x] = ∑ xP(x) = 50*0.4+100*0.6 = $80

The expected value of a prize is $80.

Answer 2

We know that the expected value of win is given by

`E\left [ x \right ]=\sum_(i=1)^(n)x_if(x_i)`

Now, from the given directions, we have

`x_1= 40, f(x_1)=50, x_2=60, f(x_2)=100`

On substituting these, values we get

`E(x)=50* 0.40 + 100* 0.60\\ E(x)=\$ 80`

Therefore, the expected value of the prize is $80