Question 1194592: A small-time bingo costs 100 for 5 games. The prize for the first three games is 5,000, the fourth is 10,000 and the last prize is 20,000. If 1,000 bingo cards are going to be sold and you could only win once, what is the expected value of a ticket?
Answer by ElectricPavlov(122)   (Show Source):
You can put this solution on YOUR website! **1. Calculate the Probability of Winning Each Prize**
* **Probability of winning any single prize:** 1 / 1000
**2. Calculate the Expected Winnings**
* Expected Winnings = (Probability of winning 5000) * 5000 + (Probability of winning 10000) * 10000 + (Probability of winning 20000) * 20000
* Expected Winnings = (1/1000) * 5000 + (1/1000) * 10000 + (1/1000) * 20000
* Expected Winnings = 5 + 10 + 20
* Expected Winnings = 35
**3. Calculate the Expected Value**
* Expected Value = Expected Winnings - Cost of Ticket
* Expected Value = 35 - 100
* Expected Value = -65
**Therefore, the expected value of a ticket is -$65.** This means, on average, you can expect to lose $65 for each ticket you buy.
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