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The state lottery sells 10 million tickets, one of which is a winner. The winning ticket pays the holder $5 million; all other lottery tickets are losers and pay $0. The price of each ticket is $1. Analyze the decision whether to buy a lottery ticket or not, using expected value theory. Suppose risk neutrality.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91226758

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