Question

A theater group holds a fund-raiser. It sells 100 raffle tickets for $7 apiece. Suppose you purchase four tickets. The prize is two passes to a Broadway show, worth a total of $150.
Define the random variable X and Construct a PDF.

Answer 1

Answer:

Check Explanation

Step-by-step explanation:

The random variable X is the possible net amount that leaves or enters one's hands. It is the amount of winnings!

X can take on value of -($7 × 4) = -$28

(That is, none of the four raffle tickets bought is picked to win)

X can also take on value of [$150 - ($7 × 4)] = $122

(That is, one of the four raffle tickets bought is picked to win)

For the probability distribution function, we find the probabilities of the different amount of winnings.

First of, probability of losing = (96/100) = 0.96

Then, probability of winning = (4/100) = 0.04

Probability density distribution is then given as

X | probability

-$28 | 0.96

$122 | 0.04

To go a step further, expected winnings would be

E(X) = Σ xᵢpᵢ = (-28)(0.96) + (122)(0.04)

= -26.88 + 4.88 = -$22

The expected winnings show that this is not a risk worth taking.

Hope this Helps!!!