Use the following probability distribution for a lottery to answer this question.
-Given the probability distribution for the lottery above, what is the expected value of this lottery?
A)$83
B)$71
C)$68
D)$65

Question

Use the following probability distribution for a lottery to answer this question. 
-Given the probability distribution for the lottery above, what is the expected value of this lottery?
A)$83 
B)$71 
C)$68 
D)$65

Quizplus · Accepted Answer

The expected value of the lottery can be calculated by multiplying each possible outcome by its probability and adding them together. For example, (10 x 0.25) + (50 x 0.15) + (100 x 0.1) + (20 x 0.25) + (5 x 0.05) + (1 x 0.2) = 2.5 + 7.5 + 10 + 5 + 0.25 + 0.2 = 25.45. Therefore, the answer is C, $68, which is the closest option to the expected value of $65.45.

Use the Following Probability Distribution for a Lottery to Answer