Mathematics 73 Online
OpenStudy (anonymous):

One thousand raffle tickets are sold for \$5.00 each. One grand prize of \$1000 and two consolation prizes of \$200 each will be awarded. Jeremy purchases one ticket. Find his expected value. Show your work for full credit.

OpenStudy (anonymous):

easy way: buy up all the tickets. you spend 1000*\$5=\$5,000 you win \$1000 + \$400 for a total of \$1400 for a net loss of \$5000 - \$1400 = \$3 600 averaged over the 1000 tickets this is a loss of \$3.60 per ticket

OpenStudy (anonymous):

so expected value of each ticket is -3.60 i.e. you expect to lose \$3.60 for each ticket you buy

OpenStudy (anonymous):

you can also use probability if you like, but you will get the same answer and it is somewhat more work

jimthompson5910 (jim_thompson5910):

Expected value = sum of probabilities * value Expected value = (1/1000)*(1000)+(2/1000)*(200)+(997/1000)*(0)-5 Expected value = -3.6 So you get the same answer

OpenStudy (anonymous):

ok it is not more difficult is it?

OpenStudy (anonymous):

nope thanks!