Question

Suppose the auction house from the preceding problem sold 200 tickets at $1 each, and had 16 prizes of $10 each. What is the new expected value?

A) $0
B) $0.2
C) –$0.2
D) $0.8

Answer 1

the answer is $0.8

200/160=1.25
200+160=360/1.25/160=200.8
so the answer is $0.8

Answer 2

Option C

Explanation:

Given that the auction house from the preceding problem sold 200 tickets at $1 each, and had 16 prizes of $10 each.

With prize Without prize Total

Tickets : 16 184 200

Prize 10 0

Price -1 -1

Net prize 9 -1

Price * tickets 144 -184 -40

Expected value = -40 dollars

For 200 tickets expected value = -40 dollars

Hence for 1 ticket ev = -40/200 = -0.20

Option c is right