In a lottery, you pay $1 and pick a number from 000 to 999. If your number comes up, you win $350, which is a profit of $349. If you lose, you lose $1. Your probability of winning is 0.001.
What is the expected value of your profit?
A) $0.349
B) -$0.65
C) $2.50
D) $0.65

Question

Quizplus · Accepted Answer

The expected value can be calculated by multiplying the profit or loss by the probability and adding up all possible outcomes. 
Expected value = (0.001 * $349) + (0.999 * -$1) = -$0.65
Therefore, the best choice is not to play the lottery at all, as the expected value is negative.

In a Lottery, You Pay $1 and Pick a Number