SOLUTION: 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. a) Find the expect

Algebra ->  Customizable Word Problem Solvers  -> Misc -> SOLUTION: 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. a) Find the expect      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 180887This question is from textbook
: 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.
a) Find the expected value
b) Find the fair price of the ticket.
This question is from textbook

Answer by edjones(8007) About Me  (Show Source):
You can put this solution on YOUR website!
you have 7 chances to win a total of 850
-2 * (1000-7)/1000=-993/500
850/7 * 7/1000=17/20
17/20 - 993/500=-142/125 or -$1.136 EV Since the EV is negative you will lose $1.136 for every $2 ticket you buy.
.
Fair price of a ticket = 850/1000=$.85
.
Ed