Question

An airline has many requests for standby flights at half of the usual one way fare. However, past experience has shown that these passengers only have about a 1 in 5 chance of getting on the standby flight. When they fail to get on a flight as a standby, their only other choice is to fly first class on the next flight out. Suppose that the usual one way air fare to New York City is $142 and the cost of flying first class is $395. Use expected value to determine if a passenger who wishes to fly to this city should opt to fly as a standby

Answer 1