Question
b) Suppose you bet 4$ on a Lottery ticket and there's a 1 in 14 million chance you win 30 million dollars. Should you make
b) Suppose you bet 4$ on a Lottery ticket and there's a 1 in 14 million chance you win 30 million dollars. Should you make this bet? Why
c) Now suppose you can spend another dollar and earn $1 million with a 1 in 2 million chance. This is an extra million; it doesn't change the payout in b). How does this change your E(x), compared to part b)? Should you add the extra dollar to your ticket?
d) On the second midterm, you determined that a 5$ bet where you had a 79% chance of winning and I had a 21% chance of winning was a good bet for you. Consider a bet with the same odds. If I still offer to pay you 5$ if you win, how much would you need to offer me if I win to make this a fair bet?
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