Question

Mathew buys a single ticket for $8 out of a lottery of 1000 tickets where the prize for the one winning is to be $800. How much is the expected earning per ticket?

Answer 1

Given:

The number of tickets = 1000

Mathew buys a single ticket for $8

Winning price = $800

To find:

The expected earning per ticket.

Solution:

It is given that the total number of tickets is 1000. So, the probability of winning is:

`P(Winning)=(1)/(1000)`

The probability of losing is:

`P(losing)=(999)/(1000)`

The expected earning per ticket is:

`E(x)=800* P(Winning)-8* P(losing)`

`E(x)=800* (1)/(1000)-8* (999)/(1000)`

`E(x)=(800)/(1000)-(7992)/(1000)`

`E(x)=(800-7992)/(1000)`

`E(x)=(-7192)/(1000)`

`E(x)=-7.192`

Therefore, the expected earning per ticket is -7.192. Here, negative sign means loss of $7.192.