Question 1206534
<br>
(1) Using the formal definition of expected value....<br>
The expected value of a ticket is<br>
{{{(1/100)(425)+(2/100)(95)+(4/100)(20)+(93/100)(0)=(425+190+80)/100=695/100=6.95}}} or $6.95.<br>
Then, since the cost of a ticket is $10, the expected gain or loss for each ticket is $6.95-$10 = -$3.05.<br>
(2) Using informal logical reasoning....<br>
The total cost of the tickets is $1000; the total prize money is $425 + 2($95) + 4($20) = $695.  So the average payout per ticket is ($695-$1000)/100 = -$3.05.<br>