Answer:
The probability of winning = 0.001 and hence the expected payoff = $0.
Step-by-step explanation:
There is a lottery contest and there are 1000 entries.
Only one will win and will get a prize of $710. All others would be given nothing.
We have to find the probability of the person winning.
Probability = [tex]\frac{number of favorable events}{total number of events}[/tex]
Number of favorable events = 1
Total number = 1000
So probability of winning the payoff = [tex]\frac{1}{1000}[/tex] = 0.001
Hence the expected payoff = $0
