A certain sweepstakes ticket has four categories of prizes with the following probabilities of being won:
Prize
Probability
$100,000
1/500,000
$50,000
1/250,000
$20,000
1/200,000
$10,000
1/100,000
If each ticket costs $1.00, what is the expected gain or loss?
Select one:
a. $.60
b. $6.00
c. $4.00
d. $.40
2 answers
Multiply each possible prize times the chance of winning and add them all up. compare that number with $1 to find your expected gain or loss. If the number is larger, you have a gain. If the number is smaller, you have a loss.
the number is larger
1 answer