QUESTION 27 Reggy and Samantha are shopping for new cars (one each). Reggy expects to pay $15,000 with 1/5 probability...
QUESTION 27
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Reggy and Samantha are shopping for new cars (one each). Reggy expects to pay $15,000 with 1/5 probability and $20,000 with 4/5 probability. Samantha expects to pay $12,000 with 1/4 probability and $20,000 with 3/4 probability. Which is true?
Reggy has a higher expected expense than Samantha for the car.
Reggy has a lower expected expense than Samantha for the car.
Reggy and Samantha have the same expected expense for the car, and it is somewhat less than $20,000.
Reggy and Samantha have the same expected expense for the car: $20,000.
Homework Answers
The expected expense for Reggy = $15000*(1/5) + ($20000)*(4/5) = $3000+$16000=$19000.
The expected expense for Samantha is = $12000*(1/4)+$20000(3/4) = $ 3000 + $15000= $18000.
Reggy has a higher expected expense than Samantha for the car.
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