You play a gambling game with a friend in which you win 25% of the time and lose 75% of the time. When you lose, you lose $1. What profit should you earn when you win, in order for the game to be fair?
A)$1
B)$2
C)$3
D)$4

Question

Quizplus · Accepted Answer

For the game to be fair, the expected value should be zero. If you win 25% of the time, the profit when you win should offset the losses. Let x be the profit when you win. The equation is 0.25x - 0.75(1) = 0. Solving for x gives x = 3.

You Play a Gambling Game with a Friend in Which