Consider a Lottery with Four Equally Likely Outcomes, A, B

question 8

Multiple Choice

Consider a lottery with four equally likely outcomes, A, B, C, and D. The associated payoffs are: $10, $30, $70, and $150, respectively. The expected value of this lottery is what?

• A)$30
• B)$65
• C)$130
• D)$260

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Definitions:

Zero-Factor Property

A principle stating that if the product of two quantities is zero, then at least one of the quantities must also be zero.

Equation

An assertion in mathematics that two expressions, often containing variables and constants, are equivalent.

Trinomial

A polynomial equation or expression that consists of three terms.

Integers

Integers encompass whole numbers that may be negative, positive, or zero but exclude any fractional or decimal numbers.