An Airline Has Requests for Standby Flights at Half of the Usual

An airline has requests for standby flights at half of the usual one-way air fare. Past
experience has shown that these passengers have about a 1 in 5 chance of getting on the
standby flight. When they fail to get on a flight as a standby, the only other choice is to fly
first class on the next flight out. Suppose that the usual one-way air fare to a certain city is
$150 and the cost of flying first class is $315. Should a passenger who wishes to fly to this
city opt to fly as a standby? [Hint: Find the expected cost of the trip for a person flying
standby.]

Correct Answer:

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Let cost of fare paid by passenger. The...

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