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An auction website charges $1 for a bid. The bidding starts at 1¢ and goes up 1¢ at a time. A television that is worth $2000 is won, on average, with a bid of $160. You make one bid at random.

Find the expected value of the outcome of the bid. (Write as an exact decimal, with a negative sign, if necessary.)

Expected Value: $ _____

Respuesta :

JKneisleyGD
$12.50/-$12.50, if I am wrong i am sorry

Answer:

The answer is: expected value is -$0.88

Step-by-step explanation:

Given is, the he bidding starts at 1¢ and goes up 1¢ at a time. A television that is worth $2000 is won, on average, with a bid of $160. So, $160 in 1¢ steps means 16000 bids.

Therefore, a person invest $1 with a 1/16000 probability of a $2000 return.  

Noe, the expected value will be =  [tex]-1+(\frac{1}{16000})*2000[/tex]

= -1+0.125 = -0.875 ≈ -$0.88

Hence, the answer is -$0.88