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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

 Dec 20, 2018
 #1
avatar+103082 
+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

 

 

cool cool cool

 Dec 20, 2018

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