Prizes and the chances of winning in a sweepstakes are given in the table below.PrizeChances1 chance in 400,000,000|1 chance in 200,000,000|$15,000,000$150,000$25,0001 chance in 80,000,000$10,0001 chance in 4,000,000$5001 chance in 100,000A watch valued at $651 chance in 7,000(a) Find the expected value (in dollars) of the amount won by one entry.(b) Find the expected value (in dollars) if the cost of entering this sweepstakes is the cost of a postage stamp (34 cents)

Answered: (a) Find the expected value (in…

(a) Find the expected value (in dollars) of the amount won by one entry. (b) Find the expected value (in dollars) if the cost of entering this sweepstakes is the cost of a postage stamp (34 cents)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Expected value of an event refers to the probable outcome of the event if all the possibilities and their their probability of happening are taken into consideration.

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