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

Question 233177: Sam bought 1 of 250 tickets selling for $2 in a game with a grand prize of $400. Was $2 a fair price to pay for a ticket to play this 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 grand prize of $400. Was $2 a fair price to pay for a ticket to play this game?
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Random Variable Values: -2 and 398
Probability Values : 249/250 and 1/250
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Expected Winnings: (249/250)(-2)+(1/250)398 = -0.4 or -40 cents
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You can expect to lose 40 cents each time you play.
You can decide whether that is fair.
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Cheers,
Stan H.
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