Blanca has her choice of either a certain income of $20,000 or a gamble with a 0.5 probability of $10,000 and a 0.5 probability of $30,000. The expected value of the gamble:
A. is less than $20,000.
B. is $20,000.
C. is greater than $20,000.
D. cannot be determined with the information provided.
Answer:B
Blanca has her choice of either a certain income of $20,000 or a gamble with a 0.5 probability of $10,000 and a 0.5 probability of $30,000. The expected value of the gamble:
A. is less than $20,000. B. is $20,000. C. is greater than $20,000. D. cannot be determined with the information provided.