Suppose you buy 1 ticket for $1 out of a lottery of 1,000 tickets where the price for the one winning ticket is to be $500. What is your expected value?
Why are you posting under various names, questions without any proposed answers or thinking?
We will be happy to critique your thinking, but not so happy to do your homework for you.
To calculate the expected value, you need to multiply each possible outcome by its probability and then sum them up.
In this case, there are two possible outcomes: winning ($500) or losing ($0). The probability of winning is 1 out of 1,000 since there is only one winning ticket out of a total of 1,000 tickets. The probability of losing is 999 out of 1,000.
Now, we can calculate the expected value:
Expected value = (Probability of winning * Value of winning) + (Probability of losing * Value of losing)
Expected value = (1/1,000 * $500) + (999/1,000 * $0)
Calculating this expression:
Expected value = $500/1,000 + $0
Expected value = $0.5 + $0
Expected value = $0.5
Therefore, the expected value of buying one ticket for $1 in this lottery with a chance to win $500 is $0.50.