Answer:
E(Y) = $0.5
Var(Y) = 14.25
you should pay the same amount $0.5
Step-by-step explanation:
E(Y) = = Σ(YP)
P = probability of each outcomes.
Var(Y) = Σp − (μ x μ)
E(Y) = (2 x 0.25) +(6 x 0.25) + (0.5 x (-3)) = $0.5
Var(Y) = (x 0.25) + (
x 0.25) +(
x 0.5) - (
)
= 14.5 - 0.25
Var(Y) = 14.25
for the difference between the payoff and cost of playing to have mean 0, you should pay the same amount $0.5
we have
----> inequality 1
The solution of the inequality 1 is the shaded area below the solid red line
The solution is the region D and region C
-----> inequality 2
The solution of the inequality 2 is the shaded area above the solid blue line
The solution is the region B and region C
The solution of the system is the common area
so
The solution is the region C
see the attached figure
therefore
the answer is the option C
Region C
