Sarah Buys Little Stuffed Animals for $5 Each

question 73

Multiple Choice

Sarah buys little stuffed animals for $5 each. They come in different varieties. If the producer stops making (retires) a certain variety, a stuffed animal of that variety will be worth $100; otherwise it is worth $0. There is 50% chance that any variety will be retired. For the purchase of an individual stuffed animal, what is the value to Sarah of knowing ahead of time whether the variety will be retired?

• A)$50
• B)$5
• C)$2.50
• D)$0