Math Problem Statement

You are deciding whether to buy a lottery ticket for $5. The ticket gives a 1% chance of winning $500 and a 99% chance of winning nothing.

Solution

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Math Problem Analysis

Mathematical Concepts

Probability
Expected Value

Formulas

Expected Value (EV) formula: EV = (P(win) × Prize) + (P(lose) × Lose)

Theorems

Law of Large Numbers (for expected value)

Suitable Grade Level

Grades 10-12