Provide one example to show how you can use the Expected Value computation to assess the fairness of a situation (probability experiment). Provide the detailed steps and calculations.

Answer 1

Texas Lottery: grand prize is 1,000,000 dollars.

Tickets cost $2
Expected number sold: 4.3 million.

probability win: 1/4.3million

expected value of a $2 ticket=1million/4.3 million=23cents