There are 10 chips in a bag. There 2 blue chip(s), 6 red chip(s), and 2 white chip(s). A player gets to draw one chip from the bag. If a blue chip is drawn, the player wins $10. If a red chip is drawn, the player wins $5. If a white chip is drawn, the player wins $1. Someone decides to play the game, hoping to win some money. It costs 5 to play the game.
a) What is the net profit and probability of drawing a blue chip? Net Profit: Probability:
b) What is the net profit and probability of drawing a red chip? Net Profit: Probability:
c) What is the net profit and probability of drawing a white chip? Net Profit: Probability:
d) What is the expected value (expected profit) from playing the game?
a) If a blue chip is drawn, the player wins $10 and It costs $5 to play the game. so Net Profit: 10-5=$5
Probability of drawing a blue chip, There are 2 blue chips out
of which player can select one chip in =
2 ways
and in total we have 10 chips out of which player can select one
chip in =
10
Hence, Probability of drawing a blue chip= 2/10 =0.2
b) simillary,
If a red chip is drawn, the player wins $5 and It costs $5 to play the game. so Net Profit: 5-5= $ 0
Probability of drawing a red chip=6/10 =0.6
c)
If a white chip is drawn, the player wins $1 and It costs $5 to play the game. so Net Profit: 1-5= $ -4
Probability of drawing a red chip=2/10 =0.2
d) expected value (expected profit) from playing the game=
profit if that
color chip is drown * probability of that color
= 10*0.2+5*0.6+1*0.2
= $ 5.2
I hope you get it.
Cheers.
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