SOLUTION: Im stuck on this question and I do not understand it fully. Someone please help me understand? Suppose you buy one of 2000 tickets sold at $1.00 each in a lottery where the priz

Algebra ->  Probability-and-statistics -> SOLUTION: Im stuck on this question and I do not understand it fully. Someone please help me understand? Suppose you buy one of 2000 tickets sold at $1.00 each in a lottery where the priz      Log On


   

Question 946547: Im stuck on this question and I do not understand it fully. Someone please help me understand?
Suppose you buy one of 2000 tickets sold at $1.00 each in a lottery where the prize is $500 to the winner. What is the expected value (net winnings) for this game? Is this a fair game.

Answer by Fombitz(32388) About Me  (Show Source):
You can put this solution on YOUR website!
Look at the number of chances to lose, 1999, and the number of chances to win, 1.
E=%28-1%29%2A%281999%2F2000%29%2B500%281%2F2000%29
E=-0.7495
No, if it was fair the expected value would be $0.
For every dollar you put in, you can expect to lose 75 cents.
Not fair at all.