Determine the expected value for the following payoff table.
A) $0
B) $200
C) $300
D) $410

Question

Determine the expected value for the following payoff table. 
A) $0 
B) $200 
C) $300 
D) $410

Quizplus · Accepted Answer

To determine the expected value, we need to find the weighted average of all possible outcomes. We do this by multiplying each outcome by its probability and then summing up the products.

Expected value = (0.1x100) + (0.2x200) + (0.3x300) + (0.4x500)
Expected value = 10 + 40 + 90 + 200 
Expected value = 340

Therefore, the best choice is D, with an expected value of $410, which is the highest among all possible outcomes.

Determine the Expected Value for the Following Payoff Table