Lois is consideriog buyiog a new bicycle for $200.It has a 20% chance of breaking down in the next year.What is the expected value in terms of repair cost for this purchase?
A)$240
B)$400
C)$20
D)$200
E)$40

Question

Quizplus · Accepted Answer

The expected value of repair cost is calculated by multiplying the cost of the repair by the probability of the event happening. If the bicycle breaks down, assuming the repair cost is equal to the purchase price ($200), the expected repair cost is 0.20 * $200 = $40.

Lois Is Consideriog Buyiog a New Bicycle for $200