Question

In a raffle, one ticket will win a $380 prize, and the rest will win nothing. There are 250 in the raffle, each costing $13. If you buy a ticket, what is the expected profit?

Answer 1

The expected profit is $ -11.48 (That is a loss, not profit)

Explanation:

The first thing is to calculate the probability of winning and the probability of losing, knowing that only 1 in 250 people would win it, therefore:

`\begin{gathered} \text{Probability of winning } \\ (1)/(250) \\ \text{Probability of losing } \\ (249)/(250) \end{gathered}`

Now we must calculate the gain or loss of winning and thethe gain or loss of losing:

`\begin{gathered} \text{ Gain or loss of winning} \\ 380-13=367 \\ \text{ Gain or loss of losing} \\ -13 \end{gathered}`

Now we calculate the expected value as follows: