SOLUTION: if a man purchases a lottery ticket, he can win a first place prize of 45000 or a second place prize of $2000 with probabilities of 0.001 and 0.003. What should be the price of one

Question 322467: if a man purchases a lottery ticket, he can win a first place prize of 45000 or a second place prize of $2000 with probabilities of 0.001 and 0.003. What should be the price of one ticket?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
if a man purchases a lottery ticket, he can win a first place prize of 45000 or a second place prize of $2000 with probabilities of 0.001 and 0.003. What should be the price of one ticket?
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Expected gain = 0.001*45000 + 0.003*2000 = $51
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For the game to "fair" they should pay $51 to play the game.
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Cheers,
Stan H.
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