Question 545093: Essay; show all work. A community 5K run will award $50 to the winner. 75 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.
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! Essay; show all work. A community 5K run will award $50 to the winner. 75 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.
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Random winning values::::::: 50,,,,,,,-20
Corresponding probabiities::::1/75,,,,,74/75
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E(x) = 50(1/75) - 20(74/75) = -$19.07
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You can expect to lose $19.07 each time you play the game.
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Fair price to play should be 20-19.07 = 93 cents
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Cheers,
Stan H.
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