Question

A game show contestant is offered the option of receiving a computer system worth ​$2300 or accepting a chance to win either a luxury vacation worth ​$4900 or a boat worth ​$6500. If the second option is chosen the​ contestant's probabilities of winning the vacation or the boat are 0.20 and​ 0.15, respectively. If the contestant were to turn down the computer system and go for one of the other​ prizes, what would be the expected​ winnings?

Answer 1

SOLUTION :

From the given data

A Game show is offering computer system worth $ 2300 accepting a chance to win either a luxury vacation worth $4900 or a boat $6500

if the second option is chosen the probability of winning the vacation or boat are 0.20, 0.15 respectively

now the Expected Winnings (x)   

probability of winning a computer system = x * p(x)

= $2300 ( there is no winning probability )

probability of winning a vacation = x * p(x)

= 0.20 * $4900

= $980

probability of winning a Boat  = x * p(x)

=0.15*6500

= $975