Find the expected value.

Statistics
Tutor: None Selected Time limit: 1 Day

State lottery ticket costs $1; the probability of winning $1,000,000 is 0.0000001, probability of winning $1,000 is 0.000005, and the probability of winning $10 is 0.0002. Find the expected value.

Oct 21st, 2015

Thank you for the opportunity to help you with your question!

1,000,000 * .0.0000001 = 0.1

1000 * 0.000005 = 0.005

10 * .0002 = .002

.1 + .005 + .002 = $0.107 :)

Please let me know if you need any clarification. I'm always happy to answer your questions.
Oct 21st, 2015

I forgot to finish the last part of the question, it says Find the expected value (gain or loss) on one ticket. Does that change anything?

Oct 21st, 2015

Ah :)
You spent $1 for a ticket that has only an expected value of $0.107. So the expected return is 1-.107 = -0.893. It's a loss :)

Oct 21st, 2015

Thank you so much!

Oct 21st, 2015

Happy to help!

Oct 21st, 2015

Did you know? You can earn $20 for every friend you invite to Studypool!
Click here to
Refer a Friend
...
Oct 21st, 2015
...
Oct 21st, 2015
May 26th, 2017
check_circle
Mark as Final Answer
check_circle
Unmark as Final Answer
check_circle
Final Answer

Secure Information

Content will be erased after question is completed.

check_circle
Final Answer