Answer:
6. 1.90
7. 1.90
Step-by-step explanation:
The expected value of winning the game is the sum of the products of the amount won and the probability of winning that amount.
6. Expected winnings = $1.00 × 0.40 + $5.00 × 0.20 + $10.00 × 0.05
= $0.40 +1.00 +0.50 = $1.90
The expected gain for the player is 1.90.
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7. We know from problem 6 that the expected gain is $1.90. In order for the expected gain to be zero, the cost of the game must be $1.90 with probability 1.
The game is fair if the cost to play is 1.90.
