Reader's Digest Ran a Sweepstakes in Which Prizes Were Listed

question 43

Essay

Reader's Digest ran a sweepstakes in which prizes were listed along with chances of
winning: $1,000,000 (1 chance in 90,000,000), $100,000 (1 chance in 110,000,000),
$25,000 (1 chance in 110,000,000), $5,000 (1 chance in 36,667,000), and $2,500 (1 chance
in 27,500,000). Assuming that there is no cost of entering the sweepstakes, find the expected
value of the amount won for one entry. If the cost of entering the sweepstakes is the cost of
a postage stamp, is it worth entering the contest?

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Definitions:

State Constitution

The fundamental governing document of a U.S. state, outlining the structure, functions, and powers of government within the state.

Legal Rules

Guidelines and principles established through legislations, regulations, or judicial decisions meant to govern behavior and enforceable through legal systems.

Secondary Source

A document or recording that relays information not originally created by the author or speaker, often summarizing or commenting on primary sources.

Compartmentalizing

The practice of separating activities, tasks, or information into distinct sections for improved management and focus.