Question
Asked Oct 29, 2019
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Suppose you buy 1 ticket for $1 out of a lottery of 1,000 tickets where the prize for the one winning ticket is to be $500. What are you expected winnings?

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Expert Answer

Step 1

From the given information,

Probability of wining lottery is = 1/1000.

Probability of not wining lottery tickets is = 1- 1/1000=999/1000.

Cost of buying a lottery tickets is $1.

Step 2

Thus, the expected gain ca...

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E(X) P(wining a lottery )x gain - P(Not wining a lottery) x loss 666 -x 0 1000 1 -x(500-1) 1000 499 1000 =0.499

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Probability

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