If a man purchases a raffle ticket, he can win a first prize of Rs. 5,000 or a second prize of Rs. 2,000 with probabilities 0.001 and 0.003 respectively. What should be a fair price to pay for the ticket?
A fair price is the expected winnings:
E = \(5000 \times 0.001 + 2000 \times 0.003 = 5 + 6 = 11\)
Fair price = Rs. 11
Answer: (A)
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