You buy a lottery ticket to a lottery that costs 10 per tick

You buy a lottery ticket to a lottery that costs $10 per ticket. There are only 100 tickets available to be sold in this lottery. In this lottery there are one $500 prize, two $100 prizes, and four $25 prizes. Find your expected gain or loss.

Solution

Since the ticket price is $10, we subtarct $10 from each price, including that one not winning ($0).

Consider:

Thus,

Expected value = - $2.00 [ANSWER, it is a loss]