Question

A grab-bag contains 30 packages worth $.65 each, 10 packages $.60 cents each, and 15 packages worth $.30 each. What is the expected value if you have to pay $.50 to pick one package at random?

Answer 1

Expected value of package = $0.04 (Approx.)

Explanation:

Given:

30 packages at $0.65 each

10 packages at $0.60 each

15 packages at 0.30 each

Pick up price for random one = $0.50

Find:

Expected value of package

Computation:

Total cost of 30 package = 30 x 0.65

Total cost of 30 package = $19.5

Total cost of 10 package = 10 x 0.60

Total cost of 10 package = $6

Total cost of 15 package = 15 x 0.30

Total cost of 15 package = $4.5

Total cost = 19.5 + 6 + 4.5

Total cost = $30

Cost of random package = 30 / [30+10+15]

Cost of random package = $0.54

Expected value of package = 0.54 - 0.50

Expected value of package = $0.04 (Approx.)