Homework Help: Math 101

Posted by Rushell on Friday, November 20, 2009 at 10:05pm.

Debra is buying prizes for a game at her school's fundraiser. The game has three levels of prizes, and she has already bought the second and third prizes. She wants the first prize to be nice enough to attract people to the game. The game's manufacturer has supplied her with the probabilities of winning first, second, and third prizes. Tickets cost $3 each, and she wants the school to profit an average of $1 per ticket. How much should she spend on each first prize? (Give your answer to the nearest cent.)

Prize Cost of Prize Probability
1st $ 0.15

2nd $1.28 0.30

3rd $0.70 0.45

Math 101 - Reiny, Friday, November 20, 2009 at 10:58pm
.15x + .3(1.28) + .45(.70) + 1 = 3

I got x = 8.67

Check:
expected value (what you have to pay out)
= .15(8.67) + .3(1.28) + .45(.7) = 1.995
or $2.00, but each ticket costs $3, so they make $1 per ticket

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