document.write( "Question 187861This question is from textbook Survey of Mathematics w/ Applications expanded edition
\n" ); document.write( ": 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.
\n" ); document.write( "a) Find the expected value
\n" ); document.write( "b) Find the fair price of the ticket.
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Algebra.Com's Answer #140946 by stanbon(75887)\"\" \"About 
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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.
\n" ); document.write( "a) Find the expected value
\n" ); document.write( "Random variable values: -2, 400, 200, 50
\n" ); document.write( "Corresponding probabilities: 986/1000 , 7/1000 , 1/1000, 5/1000
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\n" ); document.write( "Expected value = (986*-2 + 7*400 + 1*200 + 5*50)/1000 = $1.27
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\n" ); document.write( "b) Find the fair price of the ticket.
\n" ); document.write( "(986x + 7*400 + 1*200 + 5*50)/1000 = 0
\n" ); document.write( "(986x + 7*400 + 1*200 + 5*50) = 0
\n" ); document.write( "986x = -3250
\n" ); document.write( "x = 3.2961
\n" ); document.write( "Round down to get: $3.30
\n" ); document.write( "Tickets shuld be sold for $3.30 ; Then the expected win/loss would
\n" ); document.write( "be zero.
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\n" ); document.write( "Cheers,
\n" ); document.write( "Stan H.
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