-Suppose you purchase a collectible baseball card from an acquaintance for $50. You think it could be worth $1,000 with a 10% probability and $0 with a 90% probability. What is your expected value for the baseball card?
A)$150
B)$100
C)$1000
D)$50

Question

-Suppose you purchase a collectible baseball card from an acquaintance for $50. You think it could be worth $1,000 with a 10% probability and $0 with a 90% probability. What is your expected value for the baseball card?
A)$150 
B)$100 
C)$1000 
D)$50

Quizplus · Accepted Answer

The expected value (EV) is calculated as the sum of all possible values, each multiplied by the probability of its occurrence. EV = ($1,000 * 0.10) + ($0 * 0.90) = $100 + $0 = $100.

-Suppose You Purchase a Collectible Baseball Card from an Acquaintance