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keebler01
Group Title
One thousand raffle tickets are sold for $5.00 each. One grand prize of $1000 and two consolation prizes of $200 each will be awarded. Jeremy purchases one ticket. Find his expected value. Show your work for full credit.
 3 years ago
 3 years ago
keebler01 Group Title
One thousand raffle tickets are sold for $5.00 each. One grand prize of $1000 and two consolation prizes of $200 each will be awarded. Jeremy purchases one ticket. Find his expected value. Show your work for full credit.
 3 years ago
 3 years ago

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satellite73 Group TitleBest ResponseYou've already chosen the best response.0
easy way: buy up all the tickets. you spend 1000*$5=$5,000 you win $1000 + $400 for a total of $1400 for a net loss of $5000  $1400 = $3 600 averaged over the 1000 tickets this is a loss of $3.60 per ticket
 3 years ago

satellite73 Group TitleBest ResponseYou've already chosen the best response.0
so expected value of each ticket is 3.60 i.e. you expect to lose $3.60 for each ticket you buy
 3 years ago

satellite73 Group TitleBest ResponseYou've already chosen the best response.0
you can also use probability if you like, but you will get the same answer and it is somewhat more work
 3 years ago

jim_thompson5910 Group TitleBest ResponseYou've already chosen the best response.1
Expected value = sum of probabilities * value Expected value = (1/1000)*(1000)+(2/1000)*(200)+(997/1000)*(0)5 Expected value = 3.6 So you get the same answer
 3 years ago

satellite73 Group TitleBest ResponseYou've already chosen the best response.0
ok it is not more difficult is it?
 3 years ago

keebler01 Group TitleBest ResponseYou've already chosen the best response.0
nope thanks!
 3 years ago
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