Scenario 5.2:
Randy and Samantha are shopping for new cars (one each). Randy expects to pay $15,000 with 1/5 probability and $20,000 with 4/5 probability. Samantha expects to pay $12,000 with 1/4 probability and $20,000 with 3/4 probability.
-Refer to Scenario 5.2. Randy's expected expense for his car is:
A) $20,000.
B) $19,000.
C) $18,000.
D) $17,500.
E) $15,000.

Question

Quizplus · Accepted Answer

Randy's expected expense is calculated as (1/5 * $15,000) + (4/5 * $20,000) = $3,000 + $16,000 = $19,000.

Scenario 5.2: Randy and Samantha Are Shopping for New Cars (One Each)