Asked by bridgett
A community 5K run will award $50 to the winner. 60 people enter the race, and they each pay an entry fee of $20. Assuming they are all equally likely to win, what is a fair price for the competition? Round to the nearest cent
Can anyone help me get started on this one?
Can anyone help me get started on this one?
Answers
Answered by
R
Random-gain values: 50-20 = 30 ; -20
Probabilities: 1/60 ; 59/60
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E(gain)= 30(1/60)-20(59/60) = 1/2 - (59/3)= (3-59)/6 = -$9.33
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A fair price would be 20-9.33 = $10.67
Probabilities: 1/60 ; 59/60
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E(gain)= 30(1/60)-20(59/60) = 1/2 - (59/3)= (3-59)/6 = -$9.33
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A fair price would be 20-9.33 = $10.67
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