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If the probability of outcome 1 is 0.75 with an expected payoff of $5000, and the probability of outcome 2 is 0.25 with an expected payoff of $20,000, then the expected value of the outcome is
0
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($5,000 + $20,000)/2=$12,250.
(0.75x$5000) + (0.25x$20,000) = $9,375.
(0.75x$5000 + 0.25x$20,000)/2 = $4,375.
($5000/0.75) + ($20,000/0.25) = $86,667.
asked
Jun 2, 2013
in
Economics
by
anonymous
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1 Answer
0
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(0.75x$5000) + (0.25x$20,000) = $9,375.
answered
Jun 3, 2013
by
Xyz
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