Question

Five hundred tickets are sold at $4 each. One ticket will be randomly selected and the winner will receive a color television valued at $374. What is the expected value for a person that buys one ticket? Show your work and round the answer to the nearest cent.

Answer 1

The expected value for a person buying one ticket is approximately -$3.24.

Step-by-step explanation:

To calculate the expected value, we need to multiply the value of each possible outcome by its probability and sum them up.

In this case, the ticket costs $4, and the prize is a color television valued at $374. So the expected value is:

Expected Value = (Probability of winning) x (Value of winning) + (Probability of losing) x (Value of losing)

Probability of winning = 1/500 = 0.002

Probability of losing = 499/500 = 0.998

Value of winning = $374

Value of losing = -$4 (the cost of the ticket)

Expected Value = (0.002) x (374) + (0.998) x (-4) = 0.748 - 3.992 = -3.244

So the expected value for a person buying one ticket is approximately -$3.24.