Question

If someone offers you a lottery ticket that has a 25 percent chance of winning $100, a 50 percent chance of winning $200, and a 25 percent chance of winning $1,000, what is the expected value of that lottery ticket?

Answer 1

Answer: $375

Explanation:

Given : The probability of winning $100 : P(100)= 0.25

The probability of winning $200 : P(200)= 0.50

The probability of winning $1000 : P(1000)= 0.25

Now, the the expected value of that lottery ticket is given by :-

`P(100)* 100+P(200)*200+P(1000)*1000\\\\=0.25*100+0.50*200+0.25*1000\\\\=375`

Hence, the the expected value of that lottery ticket =$375