Here is some information about a holiday.
1 answer:
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Using the expected value of a discrete distribution, it is found that:
a) His expected value is of -$2.5.
b) The fair price of a ticket is of $0.5.
<h3>What is the mean of a discrete distribution?</h3>The expected value of a discrete distribution is given by the <u>sum of each outcome multiplied by it's respective probability</u>.
In this problem, the distribution for the net value of the ticket is:
- P(X = 497) = 1/1000.
- P(X = -3) = 999/1000.
Item a:
The expected value is given by:
His expected value is of -$2.5.
Item b:
With an unknown ticket price, the distribution is:
- P(X = 500 - x) = 1/1000.
- P(X = -x) = 999/1000.
The game is fair if E(X) = 0, hence:
0.5 - x = 0
x = 0.
The fair price of a ticket is of $0.5.
More can be learned about the expected value of a discrete distribution at brainly.com/question/24855677