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Mathematics, 17.12.2019 00:31 titowanthony16
You are playing monopoly with a friend. she owns and has developed park place and boardwalk with hotels.
if you roll an 8, you will land on park place and owe her $1500. you will be able to pay, but you will not have money left afterward. if you roll a 9, you will land on luxury tax and have to pay $75. if you roll a 10, you will land on boardwalk and owe her $2000, which is more than you can pay—and lose the game. if you roll a 7 or less, you will not have to pay any money to anyone.
your friend offers you insurance. pay her $500 before you roll and even if you land on boardwalk or park place, you will not have to pay any additional money. however, if you roll a 7, you will have to pay her $1000.
use probabilities to find expected values. then compare the amount of money you should expect to pay out on average, under her insurance and by chance. is her deal fair?
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