Question

In a raffle where 7000 tickets are sold for $2 each, one prize of $2900 will be awarded. What is the expected value of a single ticket in the raffle?

Answer 1

• The expected value of a single ticket in the raffle here is as follows:

1. E= -cost of ticket + expected payout,

where cost of ticket = $2

expected payout = 1(/7000) * 2900= 2/7

substituting this to the above formula we will have

E = -2 + 2/7

= -12/7 = -1.714

Therefore -$1.714 is the expected value of a single ticket in the raffle here.