Find the expected gain or loss.

Question

You buy a lottery ticket to a lottery that costs $10 per ticket. There are only 100 tickets available to be sold in this lottery. In this lottery there are one $485 prize, two $100 prizes, and four $25 prizes. Find your expected gain or loss.

Answer 1

Income: $1,000

Payout: $485+$200+$100 = $785.

The organization running this will clear $215, the difference between income & payout.

An individual ticket's Expected value is 0.01(485) + 0.02(100)+0.04(25)-10.  You can calculate that.