Two teams, A and B, are about to play a game. Previous records show that A has an 80% chance of winning, while B has a 20% of winning. Spectators can either choose to buy regular tickets or special tickets. A spectator with a special ticket will receive a refund of $2 if team A wins and a refund of $5 if team B wins. How much extra, minimally, should the special ticket cost to cover the expected value of the refunds offered?

Guest Apr 16, 2018

#1**+3 **

To find the expected value, we do this:

(20/100)*5 + (80/100)*2 = 13/5

13/5 is the expected value.

This means, that the special ticket should cost 13/5 more than the regular ticket to cover the cost of the refunds.

If you need help with expected values problems, you should watch this video explaining how to find the expected value:

https://m.youtube.com/watch?v=DAjVAEDil_Q

hope this helped!

GYanggg
Apr 16, 2018

#1**+3 **

Best Answer

To find the expected value, we do this:

(20/100)*5 + (80/100)*2 = 13/5

13/5 is the expected value.

This means, that the special ticket should cost 13/5 more than the regular ticket to cover the cost of the refunds.

If you need help with expected values problems, you should watch this video explaining how to find the expected value:

https://m.youtube.com/watch?v=DAjVAEDil_Q

hope this helped!

GYanggg
Apr 16, 2018