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4.2 Exercise 38

Avg difficulty 2.5

A “friend” offers you the following “deal.” For a $10 fee, you may pick an envelope from a box containing 100 seemingly identical envelopes. However, each envelope contains a coupon for a free gift.

  • Ten of the coupons are for a free gift worth $6.
  • Eighty of the coupons are for a free gift worth $8.
  • Six of the coupons are for a free gift worth $12.
  • Four of the coupons are for a free gift worth $40.

Based upon the financial gain or loss over the long run, should you play the game?

  1. Yes, I expect to come out ahead in money.
  2. No, I expect to come out behind in money.
  3. It doesn’t matter. I expect to break even.

OpenStax Introductory Statistics 2e, 4.2 Mean or Expected Value and Standard Deviation, exercise 38

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Adapted from Introductory Statistics 2e © 2023 Rice University. Licensed under CC BY 4.0. Source: Introductory Statistics 2e. Imported at revision 50ec917.