Lottery Prizes Alottery offers one $1000 prize, one $500 prize, and five $100 prizes. One thousand tickets are sold at $3 each. Find the expectation if a person buys one ticket
+130511 The expected value is given by:
(prize amt - cost to play) x (probability of winning)
So, we have three prizes....the probability of winning the $1000 and $500 prizes is 1/1000 and the probability of the $100 prize is 5/1000. So we have:
(1000 - 3)(1/1000) + (500 - 3)(1/1000) + (100 - 3)(5/1000) ≈ $1.98
In theory, you should probably play.
+118723 I think
There is $2000 worth of prizes and the tickets sell for a total of $3000
Therefore
The expectation is 2/3 of $3 = $2
+130511 The expected value is given by:
(prize amt - cost to play) x (probability of winning)
So, we have three prizes....the probability of winning the $1000 and $500 prizes is 1/1000 and the probability of the $100 prize is 5/1000. So we have:
(1000 - 3)(1/1000) + (500 - 3)(1/1000) + (100 - 3)(5/1000) ≈ $1.98
In theory, you should probably play.
