Scenario 5.2: Randy and Samantha Are Shopping for New Cars (One Each)

question 65

Multiple Choice

Scenario 5.2:
Randy and Samantha are shopping for new cars (one each) . Randy 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.
-Refer to Scenario 5.2. Which of the following is true?

• A) Randy has a higher expected expense than Samantha for the car.
• B) Randy has a lower expected expense than Samantha for the car.
• C) Randy and Samantha have the same expected expense for the car, and it is somewhat less than $20,000.
• D) Randy and Samantha have the same expected expense for the car: $20,000.
• E) It is not possible to calculate the expected expense for the car until the true probabilities are known.

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Definitions:

Exchange Rate

The exchange rate is the value of one currency for the purpose of conversion to another, dictating how much one currency is worth in terms of another.

Motorbike

A two-wheeled vehicle powered by an engine, similar to but often smaller and less powerful than a motorcycle.

Exchange Rate

The value of one currency for the purpose of conversion to another, dictating how much one currency is worth in terms of the other.

Random Variable

A quantity whose value is subject to variations due to chance, used in statistical calculations and probability theory.