For the wheel picture on the right assume that a person spins the pointer and is awarded the amount indicated by the pointer. If it costs $5 to play the game determine (a) the expectation of a person who plays the game and (b) the fair price to play the game.
a. what is the expectation? $ ___
Answers
Answer:
(a)
(b)
Step-by-step explanation:
First pic is a second is b
The expectation to play the game is $2.5 and the fair price to play is $7.5.
What is the expectation?The expectation is defined as the weighted average value of the random variable which is the product of the value of the random variable and its possibility.
Expectation= ∑P(win)*amount of win or loss of random variable
=∑x*P(x)
Here given that there are only two possible outcomes $5 and $10. And the possibility of every outcome is the same which is 0.5 as they occupy the same area.
As we know
Expectation= ∑P(win)*amount of win or loss of random variable
= 0.5(5-5) +0.5(10-5)
=0.5*0 + 0.5*5
=0+2.5
=$2.5
As fair price= expectation + cost of play
⇒fair price= $2.5 + $5
⇒fair price= $7.5
Therefore the expectation to play the game is $2.5 and the fair price to play is $7.5.
Learn more about expectation
here: https://brainly.com/question/10675141
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