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Consider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with a probability %. a. Construct a table of the possibilities and probabilities in this game. b. Compute the expected value of the game. 4 c. How much would you be willing to pay to play this game? d. Consider the effect of a change in the game so that if tails comes up two times in a row, you get nothing. How would your answers to parts a-c change?

Consider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with a probability %. a. Construct a table of the possibilities and probabilities in this game. b. Compute the expected value of the game. 4 c. How much would you be willing to pay to play this game? d. Consider the effect of a change in the game so that if tails comes up two times in a row, you get nothing. How would your answers to parts a-c change?

A First Course in Probability (10th Edition)
A First Course in Probability (10th Edition)
10th Edition
ISBN:9780134753119
Author:Sheldon Ross
Publisher:Sheldon Ross
Chapter1: Combinatorial Analysis
Section: Chapter Questions
Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...
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Consider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with a probability. a. Construct a table of the possibilities and probabilities in this game. b. Compute the expected value of the game. 4 c. How much would you be willing to pay to play this game? d. Consider the effect of a change in the game so that if tails comes up two times in a row, you get nothing. How would your answers to parts a-c change?
Transcribed Image Text:Consider a game in which a coin will be flipped three times. For each heads you will be paid $100. Assume that the coin comes up heads with a probability. a. Construct a table of the possibilities and probabilities in this game. b. Compute the expected value of the game. 4 c. How much would you be willing to pay to play this game? d. Consider the effect of a change in the game so that if tails comes up two times in a row, you get nothing. How would your answers to parts a-c change?
Possibilities Probability 1 1 1 1 1234 Outcome 0 heads, 4 tails 1 head, 2 tails 2 heads, 1 tail 3 heads, 1 tails
Transcribed Image Text:Possibilities Probability 1 1 1 1 1234 Outcome 0 heads, 4 tails 1 head, 2 tails 2 heads, 1 tail 3 heads, 1 tails
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