document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=180887>Question 180887</A>This question is from textbook <A HREF=http://www.amazon.com/exec/obidos/ASIN/9780321501080/algebrahomeworkh></A><BR>\n" );
document.write( ": <I><SPAN STYLE=\"word-break: break-all;\"> 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. <BR>\n" );
document.write( "a) Find the expected value<BR>\n" );
document.write( "b) Find the fair price of the ticket. <BR>\n" );
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document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #135650 by </B><A HREF=/tutors/aboutme.mpl?userid=edjones><B>edjones(8007)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=edjones><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=edjones><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=135650\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> you have 7 chances to win a total of 850<BR>\n" );
document.write( "-2 * (1000-7)/1000=-993/500<BR>\n" );
document.write( "850/7 * 7/1000=17/20<BR>\n" );
document.write( "17/20 - 993/500=-142/125 or -$1.136 EV Since the EV is negative you will lose $1.136 for every $2 ticket you buy.<BR>\n" );
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document.write( "Fair price of a ticket = 850/1000=$.85<BR>\n" );
document.write( ".<BR>\n" );
document.write( "Ed </SPAN>\n" );
document.write( "</TD></TR></TABLE>\n" );