SOLUTION: At a raffle, 2000 tickets are sold at $3 each for four prizes of $600, $250, $200, and $80. You buy one tickets. A) What is the expected value of your gain? B) interpret the res

Question 1194556: At a raffle, 2000 tickets are sold at $3 each for four prizes of $600, $250, $200, and $80. You buy one tickets.
A) What is the expected value of your gain?
B) interpret the results.
C) is this a fair game? Explain.
Answer by ikleyn(52851) (Show Source): You can put this solution on YOUR website!
.
At a raffle, 2000 tickets are sold at $3 each for four prizes of $600, $250, $200, and $80. You buy one tickets.
A) What is the expected value of your gain?
B) interpret the results.
C) is this a fair game? Explain.
~~~~~~~~~~~~~~~

Bying one ticket, you have 

    - the probability of    to win $600,  or

    - the probability of    to win $250,  or

    - the probability of    to win $200,  or

    - the probability of    to win  $80.


The expected value is then  E =  =  =  = 0.565  dollars.


Paying #3 for each ticket, the expected value of the game is  $0.565 - $3 = -$2.435.


In other words, playing many times, the gamer loses $2.435 in any game, in average.


The game is unfair.

Solved and explained.

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