Question

In a raffle where 5000 tickets are sold for $2 each, one prize of $3600 will be awarded. What is the expected value of a single ticket in the raffle?

Answer 1

If you buy one ticket you have a 1/5000 chance of winning.

Gain or loss of winning: 3600 - 2 = $3598

Expected value:

3598 x (1/5000) + (-2)x(4999/5000) = -1.28

You can expect to lose $1.28 for buying one ticket