Question

A grocery chain runs a prize game by giving each customer a ticket that may win a prize when a box is scratched. Printed on the ticket are the following probabilities for a customer who shops once a week:

Amount won Probability

$1000 0.01
$100 0.10
$10 0.20

What is the expected value of a customer’s winnings in this game

a. $22.00
b. $10.00
c. $370.00
d. $100
e. $0.31

Answer 1

The expected value of a customer's winnings in this game is $22.00. This is calculated by multiplying each prize by its probability and summing these products.

Step-by-step explanation:

To calculate the expected value of a customer's winnings in this game, we multiply each prize amount by its corresponding probability and add the results. Using the provided probabilities and values:

• $1000 × 0.01 = $10
• $100 × 0.10 = $10
• $10 × 0.20 = $2

Adding these together gives us:

$10 + $10 + $2 = $22

Therefore, the expected value of a customer's winnings in this game is $22.00.

The correct answer is (a) $22.00.