Question

In a box there are four prizes that are worth $40, three prizes worth $400, and one prize worth $3000.

A player will reach into the box and draw one of the prizes at random.

What is the fair price for this game?

Round your answer to the nearest hundredth, and do not include a $ sign or the word "dollars" in your response.

Answer 1

Solution:

Given that, there are four prizes that are worth $40, three prizes worth $400, and one prize worth $3000

Hence, total number of prizes = 4+3+1=8

Probability of drawing a prize that is worth $40 = 4 / 8 = 0.500

Probability of drawing a prize that is worth $400= 3 / 8 = 0.375

Probability of drawing a prize that is worth $3000 = 1 / 8 = 0.125

Hence, fair price for this game = 0.5*40 + 0.375*400 + 0.125*3000

= 20+150+375

= 545

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