Analyze decisions and strategies with probability concepts in applied settings.
Find the expected value of a game from its outcomes and probabilities
Problem
Compute the expected value as \(0.20(\$10)+0.80(-\$2)\), treating the loss as a negative outcome.
Big Picture
What this problem is really about
Expected value is a probability-weighted average of signed net outcomes. We’ll record gains as positive and losses as negative, confirm the probabilities cover the game, multiply each outcome by its probability, add the contributions, and interpret the sign and dollar-per-play unit in the long run.
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