Question

At a casino in Las Vegas, you are considering placing a bet either the number 7 in roulette or on the “pass line” in the dice game of craps. a) If you bet $5 on the number 7 in roulette, the probability of losing $5 is 37/38 and the probability of making a net gain of $175 is 1/38. Find your expected value if you make this bet. b) If you bet $5 on the pass line in the dice game of craps, the probability of losing $5 is 251/495 and the probability of winning $5 is 244/495. Find your expected value if you make this bet. c) Which bet is better? Why?

          At a casino in Las Vegas, you are considering placing a bet either the number 7 in roulette or on the “pass line” in the dice game of craps.
a) If you bet $5 on the number 7 in roulette, the probability of losing $5 is 37/38 and the probability of making a net gain of $175 is 1/38. Find your expected value if you make this bet.
b) If you bet $5 on the pass line in the dice game of craps, the probability of losing $5 is 251/495 and the probability of winning $5 is 244/495. Find your expected value if you make this bet.
c) Which bet is better? Why?

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Added by David M.

Elementary Statistics a Step by Step Approach

Allan G. Bluman 9th Edition

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Solved by Expert Madhur L

03/17/2023

Step 1

The probability of losing is 37/38 and the net loss is $5. Expected Value (Roulette) = (1/38 * $175) + (37/38 * -$5) Expected Value (Roulette) = $\frac{1}{38} \times 175 + \frac{37}{38} \times (-5)$ b) Show more…

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At a casino in Las Vegas, you are considering placing a bet either the number 7 in roulette or on the “pass line” in the dice game of craps. a) If you bet $5 on the number 7 in roulette, the probability of losing $5 is 37/38 and the probability of making a net gain of $175 is 1/38. Find your expected value if you make this bet. b) If you bet $5 on the pass line in the dice game of craps, the probability of losing $5 is 251/495 and the probability of winning $5 is 244/495. Find your expected value if you make this bet. c) Which bet is better? Why?

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