Question

In the long run, which plan has the higher payout? Plan A or Plan B?

Plan A

Payout	P(Payout)
$5000	0.40
$50,000$	0.28
$90,000	0.32

Plan B

Payout	P(Payout)
−$10,000	0.07
$15,000	0.6
$90,000	0.33

Answer 1

In a long run:

Expected value of plan A = $5000*0.40 + $50000*0.28 + $90000*0.32 = $ 44800

Expected value of plan B = -$10000*0.07 + $15000*0.6 + $90000*0.33 = $ 38000

Hence,

Plan A will be having higher payout.