Madeleine Allows Herself $100 Per Month for Purchasing Coffee

question 16

Multiple Choice

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3 Refer to Figure 1-3.What is the price of a regular coffee in this example?

• A)$0.80
• B)$1.25
• C)$2.00
• D)$5.00
• E)$8.00

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Definitions:

Random Variable

A variable whose possible values are outcomes of a random phenomenon.

V(X + Y)

The variance of the sum of two random variables, considering both their individual variances and covariance.

V(X)

The variance of a random variable X, representing the expectation of the squared deviation of X from its mean.

V(Y)

The notation for the variance of a random variable Y, measuring the spread of its values.