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Homework Help: Expected value: help needed

  1. Feb 2, 2010 #1
    Expected value: urgent help needed

    1. The problem statement, all variables and given/known data

    a1cb48cf8a3bcbef8c6b2657cc60cc3f.jpg
    "Spin-and-Win" is under new management. The new management has created the spinner to the right and now charges $1 per spin. (The person spinning wins the amount pointed to by the spinner.)

    a) What is the expected value for this game?

    b) What does your answer in part 'a' mean for the owner/manager, if there are 1000
    customers who play the game in a week?

    2. Relevant equations



    3. The attempt at a solution

    I tried and produced two different solutions, and I don't know which one is right!

    Trial 1:
    a) expected value for the player
    = 0.25*1/2 + 0.50*1/4 + 1*1/4 - 1
    = (-) $0.50

    b) for the owner, the expected value is (+) $0.50
    so , assuming each customer plays once,
    he will gain 1000*0.50
    = $500/wk

    Trial 2:

    Customers expected winnings = (1/2)*$0.25 + (1/4)*$0.5 + (1/4)*$2 - $1 = - $0.25

    This means the owner makes a profit of 25c per customer on average, so $250 in an average week of 1000 customers.
    ---------------------------------------------
    Could you please check for me? I am so confused!
     
  2. jcsd
  3. Feb 2, 2010 #2
    Re: Expected value: urgent help needed

    Your (a) is wrong - you wrote 1*1/4 but it should be 2*1/4 .
     
  4. Feb 2, 2010 #3
    Re: Expected value: urgent help needed

    Thank you. I can see that trial 2 is correct.
     
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