Question

A scratch off lottery ticket can be purchased for $2. There are multiple prize options, shown along with the probability, in the table below. What is the expected win (or loss) for this lottery ticket?

Round your answer to the nearest cent. Do not round until your final answer.

Win Probability
$5,000 0.000125
$250 0.000375
$75 0.002
$10 0.0025
$2 0.02
0 0.975

Answer 1

Explanation:

Now,We bought a lottery ticket for $2.

Therefore,Subtracting this amount from our expected prize amount, we will get the net win/loss amount.

Expected price amount =$0.93375

The prize of a lottery ticket =$2

Thus,The expected win/loss for this lottery ticket will be =

$0.93375 − $2= −$1.06625

$1.07 rounded to the nearest cent which is the required answer.

Answer 2

To calculate the expected win, multiply each win by its probability, and then add up all the values obtained.

Expected winnings = 5000 * 0,000125 + 250 * 0,000375 + 75 * 0,002 + 10 * 0,0025 + 2 * 0,02 + 0 * 0,975

Expected winnings = 0,625 + 0,09375 + 0,15 + 0,025 + 0,04 + 0

Expected gain = 0.93375

Thus, the expected gain is $0.93.