Q; A lottery has a $10 000 000 grand prize, a $500 000 second prize, and ten $50 000 third prizes.

Question

1.A lottery has a $10 000 000 grand prize, a $500 000 second prize, and ten $50 000 third

prizes. A ticket costs $5 and 4 000 000 tickets were sold. What is the expected value of

each ticket?

Explain the steps as well please!

Answer 1

This is just an application of the definition of expected value.

in short. (1 x 10,000,000 + 1 x 500000 + 10 x 50000 + 3999988x 0 )/ 4000000 = $2.75, Not bad as lotteries go. (assume all the prizes have to be given out)