Question 195227: I need help in order to understand this problem. If anyone can help I would be very grateful. Thank you very much for your assistance.
1000 raffle tickets are sold at $3 each. One grand prize of $100 and two consolation prizes of $75 will be awarded. Find Jake’s expectation if he purchases one ticket.
A) -$2.75 B) -$3.00 C) $0.24 D) $2.75 E) $3.00
Answer by stanbon(75887)   (Show Source):
You can put this solution on YOUR website! 1000 raffle tickets are sold at $3 each. One grand prize of $100 and two consolation prizes of $75 will be awarded. Find Jake’s expectation if he purchases one ticket.
A) -$2.75 B) -$3.00 C) $0.24 D) $2.75 E) $3.00
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Let the random variable represent Jake's earnings.
Values of the random variable are 97, 72, -3
Corresponding probabilities are (1/1000), (2/1000), (997/1000)
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Jake's expected earnings are 97(1/100)+72(2/1000) - 3(997/1000
= (97 + 144 - 2991)/1000 = -2750/1000 = -$2.75
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Cheers,
Stan H.
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