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Jacob Is Thinking of Buying a $1 Lottery Ticket

Question 81

Multiple Choice

Jacob is thinking of buying a $1 lottery ticket.In Lottery A,his odds of winning are 1 out of 1,000,and he may win $500.In Lottery B,his odds of winning are 1 out of 5,000,but he may win $5,000.What will Jacob choose to do based on expected value theory


A)  Buy a ticket from Lottery A because it has a higher expected value. 
B)  Not buy either ticket because both lotteries have very low odds of winning. 
C)  Buy a ticket from Lottery B because it has a higher expected value. 
D)  Buy either ticket because both lotteries have the same expected value.

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