(a) Explanation Formula used: Expectation: The expectation is defined as E = P 1 A 1 + P 2 A 2 + P 3 A 3 + … + P n A n , where P n represents the probability that the n th event will occur and A n represents the net amount won or loss if the n th event occurs. Calculation: There are 10000 raffle tickets and fourprizesare awarded, hence the probability of getting the prize is 4 10000 . Observe that the rewards are one for $5,000, one for $2,500, and two for $1,000, and the cost of one ticket is $5. Therefore, the reward for $5,000 will be $ 5 , 000 − $ 5 = $ 4 , 995 , and the reward for $2,500 will be $ 2 , 500 − $ 5 = $ 2 , 495 , and the reward for $1,000 will be $ 1 , 000 − $ 5 = $ 995 . It is also given that the probability that any given ticket is selected for the $5,000 prize is 1 10000 , the probability that any given ticket is selected for the $2,500 prize is 2 10000 and the probability that any given ticket is selected for the $1,000 prize is 2 10000 (b) To determine The fair price of the ticket where 10,000 raffle tickets are sold for $5 each.

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Chapter 11.3, Problem 24E

(a)

To determine

The Expected value if one purchases one ticket where 10,000 raffle tickets are sold for $5 each and four prizes are to be awarded.

(b)

To determine

The fair price of the ticket where 10,000 raffle tickets are sold for $5 each.

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Chapter 11.3, Problem 23E

Chapter 11.3, Problem 25E

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The Expected value if one purchases one ticket where 10,000 raffle tickets are sold for $5 each and four prizes are to be awarded.

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The Expected value if one purchases one ticket where 10,000 raffle tickets are sold for $5 each and four prizes are to be awarded.

The fair price of the ticket where 10,000 raffle tickets are sold for $5 each.

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