Please help me how to solve this one problem...
One thousand tickets are sold for $1 each. There is a $150 prize, a $75 prize, a $25 prize,
and a $5 prize. What is the expected value if a person purchases two tickets?
Thankkk youu
One thousand tickets are sold for $1 each. There is a $150 prize, a $75 prize, a $25 prize,
and a $5 prize. What is the expected value if a person purchases two tickets?
Thankkk youu
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Expected value is summation of the probability of X multiplied by the value of X.
The value of each prize is 1 less than its value (150 becomes 149) because the cost is 1 for each of them.
The probability of winning each prize is 1/1000
So the expected value is 1 / 1000 * 149 + 1 / 1000 * 74 + 1 / 1000 * 24 + 1 / 1000 * 4 + 996 / 1000 * -1
which is - $ 0.745.
You can just double this expected value because you have two tickets. So the total expected value is - $ 1.49
The person can expect to lose $1.49 for the two tickets.
The value of each prize is 1 less than its value (150 becomes 149) because the cost is 1 for each of them.
The probability of winning each prize is 1/1000
So the expected value is 1 / 1000 * 149 + 1 / 1000 * 74 + 1 / 1000 * 24 + 1 / 1000 * 4 + 996 / 1000 * -1
which is - $ 0.745.
You can just double this expected value because you have two tickets. So the total expected value is - $ 1.49
The person can expect to lose $1.49 for the two tickets.