If the ticket to play was actually $5 and not free, determine the new expected winnings and standard deviation.

Question

The County Fair is giving out a free lottery ticket to each person who attends. The organizers tell you that there is a .001 chance that you will win $100, a .002 chance that you will win $50 and a .006 chance that you will win $2. The rest of the time, you win nothing.

Answer 1

Free lottery:

0.001*100 + 0.002*50 + 0.006*2 + 0.991*0

= 0.1 + 0.1 + 0.012 + 0

= 0.112

dime, penny, 2 mills

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cost is $5

0.001*100 + 0.002*50 + 0.006*2 + 0.991*-5

= 0.1 + 0.1 + 0.012 + -4.955 =

-4.743