Question

NO LINKS OR ELSE YOU'LL BE REPORTED!Only answer if you're very good at Math.No guessing please.

Answer 1

Answer:  A)  gain of $0.45

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Explanation:

Let x be the net winnings the customer gets

Saying something like x = 24 means you've walked away with $24. This occurs when you pay $1, and get $25 back in prizes, so 25-1 = 24 dollars overall.

The probability of this event occurring is 1/100 since there's only one ticket with the $25 prize

Make a table as shown below. It represents all the possible x values which are all the possible net winnings. Note how 1/100 = 0.01, 3/100 = 0.03 and 95/100 = 0.95

The third column is x*p(x) which is the product of the first two columns. Adding everything in the third column (that isn't highlighted in yellow) gets us the value -0.45 which is the expected value for the customer.

This represents a loss of $0.45, aka a loss of 45 cents. This is from the perspective of the customer.

Flipping things around, the pizza company will see this is as a gain of $0.45 or a gain of 45 cents.

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Here's another way to see why this works:

The pizza company earns $100 in revenue since 100 tickets are sold for a dollar each. The company pays out 25+15+3*5 = 55 dollars in prizes overall. That means the company will make a profit of 100-55 = 45 dollars. So the average profit per ticket is 45/100 = $0.45 aka 45 cents and this is from the viewpoint of the pizza company (not the customer). The positive average profit represents a gain.