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Question

One thousand chances are sold at $6 apiece for a raffle. There is a grand prize of $500​, two second prizes of

​$275​, and five third prizes of $100.

First calculate the expected value of the lottery. Determine whether the lottery is a fair game. If the game is not​ fair, determine a price for playing the game that would make it fair.

Answer 1

992(-6)+500+2(275)+5(100)

=-5952+1550

=-4402

expected loss = about $4.40 per ticket

not fair