Chapter 14, Problem 10E

a)

To determine

To explain how the Desert Inn afford to give away millions of dollars on a $3 bet.

Explanation of Solution

As almost all of the people who bet will not win the jackpot. Hence, the Desert Inn can afford to give away millions of dollars on a $3 bet.

b)

To determine

To find the reason that the company issue a press release.

Explanation of Solution

The press release generates publicity which entices more people to gamble. There is always an expectation to wants more people to play because the overall odds are always in favor of the casino. The more people who gamble, the more the casino will earn in the long run. Even if the slot machine did pay out more than it ever took in, the publicity it gives to the casino would more than make up for the money lost. Hence, the company needs to issue a press release.