Here is this week\'s Mathbucks problem (where we use the $ notation as if we wer
ID: 3201874 • Letter: H
Question
Here is this week's Mathbucks problem (where we use the $ notation as if we were talking about real dollars): A certain game involves flipping 3 fair coins. Each ticket costs $2. If you obtain heads on all 3 flips, then you win $15 for every ticket you buy (but you still lose the $2 you paid for the ticket). Otherwise you don't win anything (but you still lose the $2 you paid for the ticket). Make a decision about whether you want to play this game, and if so, how many tickets you wish to buy using your Mathbucks account. Keep in mind that your account starts out at $1000, and you are responsible for preventing it from ever falling below $0.Explanation / Answer
answer
expected gain from the game
the probability of winning the game=0.5*0.5*0.5=0.125
and losing is =1-0.125=875
so
E(gain)=0.125*15-0.875*2-0.125*2
=-0.125
the expected gain is negative so that you will not play the game