determining the probability of success at a game show
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In the final round of a TV game show, contestants have a chance to increase their current winnings of $1million to $2million. If they are wrong, their prize is decreased to $500,000. A contestant thinks his guess will be right 50% of the time. Should he play? What is the lowest probability of a correct guess that would make playing profitable?
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Solution Summary
The teacher shows how to determine what the lowest probability of success compared to the highest probability of failure that would make sense to participate in such a game.
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Hello,
In such a case as this, we calculate by multiplying the result by the percent possible it would happen. The equation would look like this:
50% chance of increasing money by $1 million
and
50% chance of losing $500,000
or to put it in mathematical terms:
0.50 X +$1,000,000 = $500,000
0.50 X -$500,000 = $250,000
So, it makes sense to play. The question of what is the lowest probability of success would still make the play profitable can be answered as follows:
P (probability percent) = ...
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