A lottery sells 1000 tickets at $1 apiece. There is one winner who receives $100

Question

A lottery sells 1000 tickets at $1 apiece. There is one winner who receives $100, and 5 second place winners who receive $50 each. What is the expected value of a ticket? In your final answer, include the necessary calculations.
A lottery sells 1000 tickets at $1 apiece. There is one winner who receives $100, and 5 second place winners who receive $50 each. What is the expected value of a ticket? In your final answer, include the necessary calculations.
A lottery sells 1000 tickets at $1 apiece. There is one winner who receives $100, and 5 second place winners who receive $50 each. What is the expected value of a ticket? In your final answer, include the necessary calculations.

Explanation / Answer

Total winnings = $100*1 + $50*5 = $350

Thus, average winning per ticket = Total winnings/No. of tickets = $350/1000 = $0.35

Thus, expected value of a ticket = Average winning per ticket - Cost per ticket = $(0.35 - 1) = -$0.65

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