SOLUTION: Sam brought 1 to 250 tickets selling for $2 in a game with a game prize of $400. Was $2 a fair price to pay for the ticket to play the game?

Question 208097: Sam brought 1 to 250 tickets selling for $2 in a game with a game prize of $400. Was $2 a fair price to pay for the ticket to play the game?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
Sam bought 1 of 250 tickets selling for $2 in a game with a game prize of $400. Was $2 a fair price to pay for the ticket to play the game?
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Random variable values are 398 and -2
Corresponding probabilities are (249/250) and 1/250
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E(x) = (249/250)*(-2) + (1/250)*398
E(x) = -1.992 + 1.592
E(x) = -40 cents (He can expect to lose 40 cents)
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To make the game fair he should only pay $1.60 to play the game.
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Cheers,
Stan H.

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