Question

A state lottery is holding a million dollar raffle and each ticket has the following odds of being a winner:Which of the following choices best represents the price where tickets would start costing too much to play and expect to make money over the long run?$7.50$8.50$8.00$8.25$7.75ОО

Answer 1

EXPLANATION

We are told that the payoff for the raffle is one million dollars and we know that each ticket has the following chances of being a winner:

1:125,000

The probability is given by the following relationship:

`P=\frac{\text{event:particular phenomenon we want to observe}}{\text{sample space: total number of possible outcomes }}`

We need to use the expected means formula and substitute the x variable for the given payoff for the lottery ticket.

`E(x)=x_1\cdot p_1`

Replacing terms:

`E(x)=1,000,000\cdot(1)/(125,000)`

Simplifying:

`E(x)=(1,000,000)/(125,000)=8`

The expected payoff is 8 dollars. If