Question

Suppose a scratch-off lottery ticket cost $1, and has the potential for a $1,000 grand prize. You decide to buy one of these lottery tickets. Suppose that the random variable, X=Dollars Won, has the following probability distribution:

x	P(X=x)
1,000	.0001
10
1	.03
0	.95

a.) what is the probability that you will win $10?

b.) how many dollars are you expected to win?

c.) suppose your friend says," you will either win or loose with this ticket, that means there's a 50% chance to win". Is your friend correct? Justify your response.

Answer 1

Since we know that

0.0001 + 0.03 + 0.95 + x = 1

x = 1 - 0.9801

x = 0.0199

b)

Since we know that,

c) No, my friend is not correct because on average I lose more that I win
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