The expected value of a carnival game is -$6.50, and the cost to play the game is $10.00. Determine the fair price to play the game.?
update: obviously it's $6.50, not -$6.50. sorry!
- BryceLv 73 months ago
fair price= expected value + cost of play= 6.50 + 10.00= $16.50
- llafferLv 73 months ago
This doesn't make sense. A fair price is one that taking into account the odds of winning, the amount you win, etc. work out so the expected value is zero.
A negative expected value is possible and expected in carnival and casino games that favor the house (which wouldn't be a fair game).
Your question states that it costs $10 to play, then asks what's the cost of the game for a fair game. But without probabilities of winning, there is no way to know this.
There is missing information and conflicting information as to what you are given vs. what you are asking for.