Question

11. Grab Bags A convenience store has made up 20 grab! bag gifts and is offering them for $2.00 a bag. Ten bags! contain merchandise worth $1.00. Six bags contain mer- chandise worth $2.00, and four bags contain merchan- dise worth $3.00. Suppose you purchase one bag. What is your expected gain or loss?

Answer 1

SOLUTION :

Expected gain / Loss

= P(get $1 bag)  * ! + P(get $2 bag) * 2 + P(get $3 bag ) * 3 - Cost of purchase  

= 10/20 * 1 + 6/20 * 2 + 4/20 * 3 - 2

= - 0.3 ($) 

= 0.3 ($) Loss (ANSWER)