Question

EXERCISES Probability and Decision making

1. You buy a $1 ticket in a raffle. There are 1,000 tickets sold. Tickets are selected out of one of those big round drums at random. There are 3 prizes: first prize is $500; second prize is $200; third prize is $100. What’s the expected value of your ticket?

Answer 1

the probability distribution table be:-

winning amount (X)	P(X)	reason
500-1 = 499	1/1000	1 ticket is of $ 500 prize
200-1 = 199	1/1000	1 ticket is of $ 200 prize
100-1 = 99	1/1000	1 ticket is of $ 100 prize
0-1=-1	997/1000	(1000-1-1-1) = 997 tickets are of no prize

the expected value of ticket:-

  

  dollars.

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