Question

Dida bought a scratch ticket for $2.00. The potential payoffs and probability of those payoffs are shown below.

Value Probability
$0.00 0.15
$0.50 0.50
$1.00 0.20
$2.00 0.10
$10.00 0.05

What is the expected value for the scratch ticket that Dida bought?


$1.50


$1.15


$0.50


$2.00

Answer 1

9514 1404 393

Answer:

(b) $1.15

Explanation:

The expected value is the sum of products of payoff and probability:

$0×0.15 +0.50×0.5 +1.0×0.2 +2.0×0.1 +10×0.05

= $0 +0.25 +0.20 +0.20 +0.50

= $1.15 . . . . expected value of the scratch ticket