Frank is considering moving to Denver. There is a 70 percent chance that he will find a job that pays $1,000 more than what he currently earns and a 30 percent chance he will find one that pays $3,000 less. The expected value of moving to Denver is:
A)-$200.
B)$200.
C)$700.
D)$900.

Question

Frank is considering moving to Denver. There is a 70 percent chance that he will find a job that pays $1,000 more than what he currently earns and a 30 percent chance he will find one that pays $3,000 less. The expected value of moving to Denver is:
A)-$200.
B)$200.
C)$700.
D)$900.

Quizplus · Accepted Answer

The expected benefit of moving to Denver is: -$200 = (0.70)($1,000)+ (0.30)
(-$3,000).

Frank Is Considering Moving to Denver