Answer:
$1,620
Explanation:
If you are looking for a way to make some money, you might be tempted by the offer of a purchase that has a positive expectation. But before you jump into it, you should know what expectation really means and how to calculate it. Expectation is not the same as the actual outcome of a purchase. It is just an average of what you can expect to get in the long run, based on the probabilities of different outcomes. Sometimes you might get more than the expectation, sometimes less, and sometimes nothing at all. For example, suppose you have a chance to buy a lottery ticket that costs $7,200 and has a 50% chance of winning $9,000, a 10% chance of winning nothing, and a 40% chance of losing your money. How do you know if this is a good deal or not? You can use the formula for expectation to find out:
Expectation = (50% x $9,000) + (10% x $0) + (40% x -$7,200)
Expectation = (0.5 x 9,000) + (0.1 x 0) + (0.4 x -7,200)
Expectation = 4,500 + 0 - 2,880
Expectation = 1,620
The expectation of this purchase is $1,620. This means that on average, you can expect to make $1,620 from this purchase in the long run. But this does not mean that you will always make $1,620 every time you buy the ticket. Sometimes you might win $9,000 and be very happy. Sometimes you might lose $7,200 and be very sad. And sometimes you might win nothing and be very bored. The expectation is just an average of all these possible outcomes.
So what does this mean for your decision? Well, it depends on how much you value risk and reward. If you are a risk-taker who likes to gamble and doesn't mind losing money sometimes, then you might go for the purchase with a positive expectation. After all, you have a chance to make more money than you spend in the long run. But if you are a risk-averse person who prefers to play it safe and avoid losses, then you might stay away from the purchase with a positive expectation. After all, you have a chance to lose money or break even in the short term.
The choice is yours. But remember: expectation is not reality. It is just a mathematical tool to help you evaluate your options. Don't let it fool you into thinking that you know what will happen in the future. The only thing that is certain is uncertainty, and luckily this is just Mathematics!
✧☆*: .｡. That's all folks, have fun with math! (✧ω✧) .｡.:*☆✧