SOLUTION: Could you please help me with this? Thank you 1000 tickets for prizes are sold for $2 each. Seven prizes will be awarded – one for $400, one for $200, and five for $50. Steven p

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Question 145212This question is from textbook
: Could you please help me with this? Thank you
1000 tickets for prizes are sold for $2 each. Seven prizes will be awarded – one for $400, one for $200, and five for $50. Steven purchases one of the tickets.
400(1/1000) + 200(1/1000) + 50(5/1000) – 2(993/1000) = -1.14
a) Find the expected value expected value is -$1.14
b) Find the fair price of the ticket. ?????
This question is from textbook

Answer by jim_thompson5910(35256)   (Show Source): You can put this solution on YOUR website!
a) You are correct.

b) To find the fair price, replace the 2 with x and the -1.14 with 0 (since a "fair" price means that the player will break even) to get




Multiply


Combine like terms


Subtract from both sides


Multiply both sides by to completely isolate x



Multiply


Use a calculator to approximate the fraction


Round to the nearest hundredth


So the fair price of the ticket is about 86 cents.

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