document.write( "Question 211653: HELP! losing my mind over this one.\r
\n" ); document.write( "\n" ); document.write( "500 tickets for prizes are sold for $2 each. Five prizes will be awarded- one for $300, one for $200, and three for $50. Steven purchases one of the tickets.\r
\n" ); document.write( "\n" ); document.write( "a) Find the expected value
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Algebra.Com's Answer #159945 by Edwin McCravy(20056) $\"\"$ $\"About$

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500 tickets for prizes are sold for $2 each. Five prizes will be awarded- one for $300, one for $200, and three for $50. Steven purchases one of the tickets.
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document.write( "His possible net winnings are \r\n" );
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document.write( "gain\r\n" );
document.write( " or\r\n" );
document.write( "loss    probability\r\n" );
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document.write( "$298    1/500 = .002\r\n" );
document.write( "$198    1/500 = .002\r\n" );
document.write( " $48    3/500 = .006\r\n" );
document.write( " -$2  495/500 = .990\r\n" );
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document.write( "So he would average losing 70 cents if the same lottery were\r\n" );
document.write( "held many times and he bought one ticket each time. \r\n" );
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\n" ); document.write( "b) Find the fair price of the ticket.
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document.write( "This equals the value of the ticket if the ticket were free.\r\n" );
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document.write( "If the ticket were free you could not lose money.  Then\r\n" );
document.write( "the lottery would be like this:\r\n" );
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document.write( "gain\r\n" );
document.write( " or\r\n" );
document.write( "loss  probability\r\n" );
document.write( "      \r\n" );
document.write( "$300    .002\r\n" );
document.write( "$200    .002 \r\n" );
document.write( " $50    .006\r\n" );
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document.write( "So a fair price for the ticket would be $1.30\r\n" );
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document.write( "Edwin

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