SOLUTION: A special New York State lottery offers a grand prize of $100,000, three second prizes of $10,000, and ten third prizes of $1000. The winning ticket can be any six-digit number fro

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Question 128448This question is from textbook Fundamentals of Mathematics
: A special New York State lottery offers a grand prize of $100,000, three second prizes of $10,000, and ten third prizes of $1000. The winning ticket can be any six-digit number from 000,000 to 999,999. If a person buys one ticket, what is a fair price to pay for the ticket? This question is from textbook Fundamentals of Mathematics

Answer by oscargut(2103) About Me  (Show Source):
You can put this solution on YOUR website!
You have in this lottery 1000000 of posibilities
You have to find the expected value of X= value to win
You can win 100000 or 10000 or 0
P(X=100000)=1/1000000
P(X=10000)=3/1000000
P(X=1000)=10/1000000
so the fair price = fp = 100000(1/1000000)+10000(3/1000000)+1000(10/1000000)
=1/10+3/100+1/100=0.104
R: the fair price is fp = $ 0.104