Final answer:
The difference between a fair and loaded raffle is that a fair raffle gives equal chances to all participants. The expected loss per ticket in the given fair raffle is $2. When buying four tickets, the expected loss per raffle is $8.
Step-by-step explanation:
A fair raffle offers equal chances for every participant, whereas a loaded raffle might have biases that affect the outcome. To calculate expected gain or loss from a fair raffle where you buy a $10 ticket and 100 tickets are available:
- P(500) = 1/100
- P(100) = 2/100
- P(25) = 4/100
- P(0) = 93/100
The expected value of a single ticket is calculated as:
(1/100 * $500) + (2/100 * $100) + (4/100 * $25) - (1 * $10) = $5 + $2 + $1 - $10 = -$2
Your expected loss per ticket is therefore $2.
When purchasing four tickets, you multiply the single ticket expectation by four:
4 * -$2 = -$8
So, your expected loss when buying four tickets is $8 per raffle.