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A game popular in Nevada gambling casinos is Keno, which is played as follows: Twenty numbers are selected at random by the casino from the set of numbers $1$through localid="1646826270110" $80$. A player can select from $1$to $15$numbers; a win occurs if some fraction of the player's chosen subset matches any of the$20$numbers drawn by the house. The payoff is a function of the number of elements in the player's selection and the number of matches. For instance, if the player selects only 1 number, then he or she wins if this number is among the set of $20$, and the payoff is localid="1646826317820" $\$2.20$won for every dollar bet. (As the player's probability of winning in this case is localid="1646826350805" $\frac{1}{4}$, it is clear that the "fair" payoff should be localid="1646826358311" $\$3$won for every localid="1646826365537" $\$1$bet.) When the player selects localid="1646826399342" $2$numbers, a payoff (of odds) of localid="1646826373323" $\$12$won for every localid="1646826380487" $\$1$bet is made when both numbers are among the localid="1646826388251" $20$.

Twenty numbers are randomly

picked from $1$to $80$. A player can select 1 to $15$numbers and wins when a ratio of his numbers matches the twenty numbers.

We need to select the fair payoff when the player selected $2$numbers.

Let $X$denote the number of matching numbers for the player. The number of successes among random draws from a finite population with two possible outcomes follows a hypergeometric distribution.

$N=$Population size$=80$

$n=$Number of draws $=2$

$m=$Number of observed successes $=20$

Formula hypergeometric probability:

$P(X=i)=\frac{\left(\begin{array}{c}m\\ i\end{array}\right)\left(\begin{array}{c}N-m\\ n-i\end{array}\right)}{\left(\begin{array}{c}N\\ n\end{array}\right)}$

Evaluate the definition of hypergeometric probability at $i=2$(which is when the player will win).

$P(X=2)=\frac{\left(\begin{array}{c}20\\ 2\end{array}\right)\left(\begin{array}{c}80-20\\ 2-2\end{array}\right)}{\left(\begin{array}{c}80\\ 2\end{array}\right)}$

$=\frac{\left(\begin{array}{c}20\\ 2\end{array}\right)\left(\begin{array}{c}60\\ 0\end{array}\right)}{\left(\begin{array}{c}80\\ 2\end{array}\right)}$

$=\frac{19}{316}$

$鈮�0.0601$

Since the probability of winning is about $0.0601$, the pay would be fair when you win $\frac{1}{0.0601}鈮�\$16.64$and thus the fair payoff is then $\$15.64$won for every $\$1$bet made (as the $\$1$bet will also be returned resulting in a total gains of$\$16.64)$

(a) $\$15.64$ won for every $\$1$ bet made.

Given in the question that a game popular in Nevada gambling casinos is Keno, which is played as follows: Twenty numbers are selected at random by the casino from the set of numbers$1$through $80$. A player can select from $1$to $15$numbers; a win occurs if some fraction of the player鈥檚 chosen subset matches any of the $20$numbers drawn by the house. The payoff is a function of the number of elements in the player鈥檚 selection and the number of matches. For instance, if the player selects only $1$ number, then he or she wins if this number is among the set of $20$, and the payoff is $\$2.20$ won for every dollar bet. (As the player鈥檚 probability of winning in this case is$14$ , it is clear that the 鈥渇air鈥� payoff should be$\$3$won for every $\$1$ bet.) When the player selects 2 numbers, a payoff (of odds) of$\$12$ won for every $\$1$ bet is made when both numbers are among the $20.$

Probability that exactly $k$of the $n$numbers chosen are among the $20$selected by the house.

Let $X$represent the number of matching numbers for the player. The number of successes among random draws from a finite population with two possible outcomes follows a hypergeometric distribution.

$N=$Population size $=80$

$n=$Number of draws

$m=$Number of observed successes

Formula hypergeometric probability:

$P(X=i)=\frac{\left(\begin{array}{c}m\\ i\end{array}\right)\left(\begin{array}{c}N-m\\ n-i\end{array}\right)}{\left(\begin{array}{c}N\\ n\end{array}\right)}$

Evaluate the definition of hypergeometric probability at $i=k$.

$P_{n,k}=P(X=k)$

$=\frac{\left(\begin{array}{c}20\\ k\end{array}\right)\left(\begin{array}{c}80-20\\ n-k\end{array}\right)}{\left(\begin{array}{c}80\\ n\end{array}\right)}$

$=\frac{\left(\begin{array}{c}20\\ k\end{array}\right)\left(\begin{array}{c}60\\ n-k\end{array}\right)}{\left(\begin{array}{c}80\\ n\end{array}\right)}$

Since the probability of winning is$\frac{1}{0.0601}鈮�\$16.64$ 16.64$about $0.0601$, the pay would be fair when you win 16.64$ and thus the fair payoff is then $\$15.64$won for every $\$1$bet made (as the $\$1$bet will also be returned resulting in a total gains of $\$16.64$).

$P_{n,k}=\frac{\left(\begin{array}{c}20\\ k\end{array}\right)\left(\begin{array}{c}60\\ n-k\end{array}\right)}{\left(\begin{array}{c}80\\ n\end{array}\right)}$

Given in the question that,a game popular in Nevada gambling casinos is Keno, which is played as follows: Twenty numbers are selected at random by the casino from the set of numbers $1$through $80$. A player can select from $1$to $15$numbers; a win occurs if some fraction of the player鈥檚 chosen subset matches any of the $20$numbers drawn by the house. The payoff is a function of the number of elements in the player鈥檚 selection and the number of matches. For instance, if the player selects only $1$number, then he or she wins if this number is among the set of $20$, and the payoff is $\$2.20$ won for every dollar bet. (As the player鈥檚 probability of winning in this case is $14$ , it is clear that the 鈥渇air鈥� payoff should be $3 won for every $1 bet.) When the player selects 2 numbers, a payoff (of odds) of $\$12$ won for every $\$1$ bet is made when both numbers are among the $20$

Let $X$represent the number of matching numbers for the player. The number of successes among random draws from a finite population with two possible outcomes follows a hypergeometric distribution.

$N=$Population size $=80$

$n=$Number of draws $=10$

$m=$Number of observed successes $=20$

Formula hypergeometric probability:

$P(X=i)=\frac{\left(\begin{array}{c}m\\ i\end{array}\right)\left(\begin{array}{c}N-m\\ n-i\end{array}\right)}{\left(\begin{array}{c}N\\ n\end{array}\right)}$

Evaluate the definition of hypergeometric probability at

$i=0,1,2,3,4,5,6,7,8,9,10\text{.}$

$P(X=0)=\frac{\left(\begin{array}{c}20\\ 0\end{array}\right)\left(\begin{array}{c}80-20\\ 10-0\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 0\end{array}\right)\left(\begin{array}{c}60\\ 10\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.0458$

$P(X=1)=\frac{\left(\begin{array}{c}20\\ 1\end{array}\right)\left(\begin{array}{c}80-20\\ 10-1\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 1\end{array}\right)\left(\begin{array}{c}60\\ 9\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.1796$

$P(X=2)=\frac{\left(\begin{array}{c}20\\ 2\end{array}\right)\left(\begin{array}{c}80-20\\ 10-2\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 2\end{array}\right)\left(\begin{array}{c}60\\ 8\end{array}\right)}{\left(\begin{array}{l}80\\ 10\end{array}\right)}鈮�0.2953$

$P(X=3)=\frac{\left(\begin{array}{c}20\\ 3\end{array}\right)\left(\begin{array}{c}80-20\\ 10-3\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 3\end{array}\right)\left(\begin{array}{c}60\\ 7\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.2674$

$P(X=4)=\frac{\left(\begin{array}{c}20\\ 4\end{array}\right)\left(\begin{array}{c}80-20\\ 10-4\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 4\end{array}\right)\left(\begin{array}{c}60\\ 6\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.1473$

$P(X=5)=\frac{\left(\begin{array}{c}20\\ 5\end{array}\right)\left(\begin{array}{c}80-20\\ 10-5\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 5\end{array}\right)\left(\begin{array}{c}60\\ 5\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.0514$

$P(X=6)=\frac{\left(\begin{array}{c}20\\ 6\end{array}\right)\left(\begin{array}{c}80-20\\ 10-6\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 6\end{array}\right)\left(\begin{array}{c}60\\ 4\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.0115$

$P(X=7)=\frac{\left(\begin{array}{c}20\\ 7\end{array}\right)\left(\begin{array}{c}80-20\\ 10-7\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 7\end{array}\right)\left(\begin{array}{c}60\\ 3\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.0016$

$P(X=8)=\frac{\left(\begin{array}{c}20\\ 8\end{array}\right)\left(\begin{array}{c}80-20\\ 10-8\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 8\end{array}\right)\left(\begin{array}{c}60\\ 2\end{array}\right)}{\left(\begin{array}{l}80\\ 10\end{array}\right)}鈮�0.0001$

$P(X=9)=\frac{\left(\begin{array}{c}20\\ 9\end{array}\right)\left(\begin{array}{c}80-20\\ 10-9\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 9\end{array}\right)\left(\begin{array}{c}60\\ 1\end{array}\right)}{\left(\begin{array}{c}80\\ 10\end{array}\right)}鈮�0.000006$

$P(X=10)=\frac{\left(\begin{array}{l}20\\ 10\end{array}\right)\left(\begin{array}{l}80-20\\ 10-10\end{array}\right)}{\left(\begin{array}{l}80\\ 10\end{array}\right)}=\frac{\left(\begin{array}{c}20\\ 10\end{array}\right)\left(\begin{array}{c}60\\ 0\end{array}\right)}{\left(\begin{array}{l}80\\ 10\end{array}\right)}鈮�0.0000001$

The expected value (or mean) is the sum of the product of each possibility $x$(dollars won for each $\$1$bet) with its probability

$渭=鈭�xP(X=x)$

$=(-1)脳0.0458+(-1)脳0.1796+(-1)脳0.2953$

$+(-1)脳0.2674+(-1)脳0.1473+1脳0.0514$

$+17脳0.0115+179脳0.0016+1299脳0.0001$

$+2599脳0.000006+24999脳0.0000001$

$鈮�-0.25$

$-\$0.25\$$ (a loss of $\$0.25$).

$-\$0.25$