+315
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
+128460 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
