A community 5K run will award $50 to the winner. 80 people enter the race, and they each pay an entry fee of $20. Assuming they are all equally likely to win, what is a fair price for the competition? Round to the nearest cent.
My work:
Probability of winning= 1/80
Probability of losing= 79/80
E=P(wins)(amount won) + P(loss)(amount lost)
E= 1/80 * 30/1 + 79/80 * -20/1
E= 3/8 + -158/8
E= -19.375
E is approximately -$19.38 this would be the total expectation
Fair price = expectation + cost to play
Fair price = -19.38 + 20
Fair price = $.62
Is this correct or where did I go wrong?
My work:
Probability of winning= 1/80
Probability of losing= 79/80
E=P(wins)(amount won) + P(loss)(amount lost)
E= 1/80 * 30/1 + 79/80 * -20/1
E= 3/8 + -158/8
E= -19.375
E is approximately -$19.38 this would be the total expectation
Fair price = expectation + cost to play
Fair price = -19.38 + 20
Fair price = $.62
Is this correct or where did I go wrong?
