Suppose a lottery ticket costs $1and has a jackpot of $1,000.What must the probability of winning nothing be if the bet is fair?
A)99%
B)99.9%
C)99.999%
D)99.9999%

Question

Quizplus · Accepted Answer

For a bet to be fair, the expected value of the lottery ticket must equal its cost. The expected value is calculated as the sum of all possible outcomes weighted by their probabilities. If the jackpot is $1,000 and the cost of the ticket is $1, the probability of winning the jackpot (p) plus the probability of winning nothing (1-p) must result in an expected value of $1. The equation is: $1,000*p + $0*(1-p) = $1. Solving for p gives p = 1/1000 or 0.1%. Therefore, the probability of winning nothing is 100% - 0.1% = 99.9%.

Suppose a Lottery Ticket Costs $1and Has a Jackpot of $1,000.What