Question

Motorcyclin’ Manco is arguing with his mom about buying a \$30$30dollar sign, 30 light for his motorcycle. His mom wants him to be safe, but Manco thinks that lights are too expensive. Based on traffic data, Manco makes the table below which shows the time, probability, and cost of three different types of accidents if Manco doesn’t have the light. If Manco purchases the light, it will not matter in the morning or at dusk, but it will prevent a night accident from occurring. Assume that Manco can get in at most one accident and that Manco’s table is accurate. What is the expected total cost of accidents and lights if Manco buys the light? Round your answer to the nearest dollar. \$$dollar sign What is the expected total cost of accidents and lights if Manco does not buy the light? Round your answer to the nearest dollar. \$$dollar sign If Manco wants the best payoff in the long run, he should .

Answer 1

Answer:

$880 (with the light)

$2850 (without the light)