Question

3. You pay $5 to play a California Lottery game. There is a 0.3 chance that you win $5 0.1 chance that you win $10, a 0.01 chance that you win $50.

(a) If X is the variable which represents your total winnings/losses, write the probability distribution for X.

(b) Compute the expected value E(X). Interpret this value.

Answer 1

i am denoting win by + sign and loss by - sign.

cost of ticket = 5 dollars.

a).the probability distribution of X be:-

X( in $ )	P(X)
(50-5) = 45	0.01
(10-5) = 5	0.1
(5-5) = 0	0.3
(0-5)= -5 [ 0 means they will win no money]	1- (0.01+0.1+0.3) = 0.59

b).the expected value of the game be:-

interpretation:-

you will expect $ 2 loss by playing a California Lottery game

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