SOLUTION: One thousand raffle tickets are sold for $1.00 each. One grand prize of $400 and two consolation prizes of $100 each will be awarded. Jeremy purchases one ticket. Find his expected

Algebra ->  Probability-and-statistics -> SOLUTION: One thousand raffle tickets are sold for $1.00 each. One grand prize of $400 and two consolation prizes of $100 each will be awarded. Jeremy purchases one ticket. Find his expected      Log On


   

Question 408575: One thousand raffle tickets are sold for $1.00 each. One grand prize of $400 and two consolation prizes of $100 each will be awarded. Jeremy purchases one ticket. Find his expected value. Show your work for full credit.
Answer by stanbon(75887) About Me  (Show Source):
You can put this solution on YOUR website!
One thousand raffle tickets are sold for $1.00 each. One grand prize of $400 and two consolation prizes of $100 each will be awarded. Jeremy purchases one ticket. Find his expected value.
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Let x be Jeremy's gain
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Random gain values are: 399.......99........99.......-1
Matching probabilities: 1/10^3..1/10^3....1/10^3....997/1000
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Expected gain = (399 + 99 + 99 - 997)/1000 = -400/1000 = -40 cents.
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He can expect to lose 40 cents on his purchase.
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Cheers,
Stan H.