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A lottery ticket which pays $2 million dollars will only cost you $2 dollars. To win a person must match 6 numbers from a total of 50 numbers. What is the expected payoff if you purchase one ticket?

A)

$0.13

B)

$1.87

C)

-$0.13

D)

-$1.87

Cupcake Dec 20, 2018

#1**+2 **

C(50, 6) = 15890700 = the number of winning "sets" of numbers

Only one will win.....so [ assuming one winner]......the probability of winning is just 1/15890700

And the probability of losing is [ 1 - prob of winning ]

Expected value =

Prize money * probability of winning - Cost to play * probability of losing =

2,000,000 * (1 / 15890700) - 2 * [ 1 - 1/15890700] ≈ -1.87 = -$1.87

CPhill Dec 20, 2018