Question 1162406: Sam and Dana have bet money on a card game they are playing against each other. Sam pays $1 to play, and Dana pays $4. They will shuffle a deck of cards and flip over the top card. If the top card is a heart, club, or diamond, Dana gets all $5. If the top card is a spade, then Sam gets all $5.
-What is the expected value of this game to Dana?
-If they play this game 10 times, what is the expected profit/loss for Sam?
-Is it beneficial for Sam to play this game? Justify your answer with a complete sentence.
Answer by Edwin McCravy(20060)   (Show Source):
You can put this solution on YOUR website!
Dana
Winnings Probability Expectation
Non-spade $1 0.75 ($1)(0.75) = $0.75
Spade -$4 0.25 (-$4)(0.25) = -$1.00
Total expectation = -$0.25
Dana's expected value is -$0.25 which means she will average losing 25 cents
per game.
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Sam
Winnings Probability Expectation
Spade $4 0.25 ($4)(0.25) = $1.00
Non-spade -$1 0.75 (-$1)(0.75) = -$0.75
Total expectation = +$0.25
Sam will average winning 25 cents per game.
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Sam's expected profit is $0.25, which means he will average winning 25 cents
per game.
If they play 10 times, Sam's expected profit is 10×$.25 = $2.50.
It is beneficial for Sam to play since on the average, he will win 25 cents
per game.
[Dana is stupid if she plays at all! J].
Edwin
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