SOLUTION: ``For a fair game, what should be the charge to play if there is a .002 probability to win $1,000, .008 probability to win $100, and .99 probability of not winning anything? I a

Question 300280: ``For a fair game, what should be the charge to play if there is a .002 probability to win $1,000, .008 probability to win $100, and .99 probability of not winning anything?
I am very pressed for time I have to hand in my assignment today at 2pm can someone please help me out? i really appreciate it.''.
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
``For a fair game, what should be the charge to play if there is a .002 probability to win $1,000, .008 probability to win $100, and .99 probability of not winning anything?
------------
Let "x" be the price to play.
Random # values: 1000-x, 100-x, 0-x
Probabilities::: 0.002, 0.008, 0.99
--------------------------------------------
Equation:
Note: "Even" means E(x) = 0
-----
E(x) = 0.002(1000-x) + 0.008(100-x) + 0.990(-x)
----
E(x) = [2000-2x + 800-8x - 990x]/1000 = 0
---
[2800 - 1000x] = 0
x = $2.80
----
You should pay $2.80 to play the game.
========================================
Cheers,
Stan H.
RELATED QUESTIONS
For a fair game, what should be the charge to play if there is a .002 probability to win... (answered by richwmiller)

For a fair game what should be the charge to play if there is a .003 probability to win... (answered by stanbon)

The probability I win a given game is .6543 I play the game 734 times. How many... (answered by MathLover1)

When Martin and Thomas play a game, the probability that Thomas will win is 3/4. What... (answered by mathmate)

You play a game based on drawing a single card from a standard deck. You win$6 dollars if (answered by lynnlo)

You play a gambling game with your friend in which you win 60% of the time and lose 40%... (answered by jim_thompson5910)

in a particular game, a fair die is tossed. if the number of spots showing is a six, you... (answered by solver91311)

You play a gambling game with a friend in which you win 25% of the time and lose 75% of... (answered by ikleyn)

A player rolls a fair die and receives a number of dollars equal to the number of dots... (answered by rothauserc)