Asked by Ashley Tucker on Jun 13, 2024
Verified
At a fair carnival roulette wheel,a player can either win $10,$30,or $80.If the player were to be made indifferent between playing the game or not,how much should the owner charge him?
A) $30
B) $40
C) $50
D) $80
Charge
A fee or cost for a service rendered or a penalty for a wrongdoing.
- Identify and apply the principles of probability in calculating expected outcomes in financial contexts.
- Apply the concept of expected value to real-world scenarios such as carnival games and software development decisions.
Verified Answer
JE
Jordan EvraaJun 19, 2024
Final Answer :
B
Explanation :
To find how much the owner should charge the player to make him indifferent, we need to calculate the expected value of the game.
The expected value is found by multiplying the probability of each outcome by its corresponding payout and summing the results:
E(X) = (1/3)*$10 + (1/3)*$30 + (1/3)*$80 = $40
Therefore, the owner should charge the player $40 to make him indifferent between playing the game or not.
Among the given choices, the closest to $40 is option B ($40).
The expected value is found by multiplying the probability of each outcome by its corresponding payout and summing the results:
E(X) = (1/3)*$10 + (1/3)*$30 + (1/3)*$80 = $40
Therefore, the owner should charge the player $40 to make him indifferent between playing the game or not.
Among the given choices, the closest to $40 is option B ($40).
Learning Objectives
- Identify and apply the principles of probability in calculating expected outcomes in financial contexts.
- Apply the concept of expected value to real-world scenarios such as carnival games and software development decisions.
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