Temple University
Department of Economics

Economics 92
Principles of Microeconomics
Spring 2000

Probability and Expectation: A Trip "Down the Shore"

You are doing a bit of background preparation before your first trip to Atlantic City. Complete all of the questions.  Enter your answers in the blanks provided. Where a numerical answer is called for you may enter decimal or a fraction. When you are done press the submit button at the bottom of the page.

Please enter your name:

First name
Last name
  1. Ben Plowin, from Iowa, draws a card at random from a standard deck. What is the probability that he will draw a 'heart'?


    1/4, since a quarter of the cards in the deck are hearts.

  2. Given that Ben has drawn is a heart, what is the probability that it is a three?


    Only 1/13 since suit and face value are independent.

    Marge N. Overra has been observing visitors to Atlantic City and their choice of one armed bandit. She has compiled the following table of results on age and the choice of nickel versus dollar slots.

    3.    

    Age
        Over 60 Under 60

    Cost
    of
    Play

    		 Nickel slot machine .5 .1
    Dollar slot machine .1 .3

  3. Are the events 'Age' and 'Cost of Play' independent? Select any of the following options that apply:
    Independent
    Mutually exclusive
    Dependent
    Dependent since the product of the marginals is not equal to the intersection.  .6x.6 = .36 not .5

  4. You have three coins.  You toss them all on the table at once.  What is the probability of one or more 'heads'?

    The probability of no heads is 1/8, so the probability of one or more heads is 1-(1/8) = 7/8 = .875 

  5. In the 'three coin toss' of question 4, your aunt, E. Lucy Dayte, pays you $3 for each head that is showing and you pay her $2 for each tail that is showing.  What are your expected earnings from any toss of the three coins.
    $
    9x(1/8)+4x(3/8)+(-1)x(3/8)+(-6)(1/8) = 1.5

  6. In the three coin toss problem, what is the variance of your earnings?

    81/8+16(3/8)+1(3/8)+36(1/8) - (12/8)2 = 18.75