Question

there is a raffle with 1,000 tickets one ticket will win a $170 prize one ticket will win a $110 prize and the rest will win nothing. if you have a ticket what is the expected payoff

Answer 1

1000 tickets

1 ticket = $170

1 ticket = $110

998 = nothing

Probability of each prize

P(170) ) 1/1000

P(110) = 1/1000

P(0) = 998/1000

Payoff = 170(1/1000) + 110(1/1000) + (0)(998/1000)

= 170/1000 + 110/1000

= 0.17 + 0.11

= $0.28

The expected payoff is $0.28