Question

There is a raffle for a $350 prize. Out of 200 tickets, each costing $6, one ticket will win the prize, and the other tickets will win nothing. If you buy a ticket, what is the expected profit?

Answer 1

Step 1:

Draw out a table as shown below

Prize (x) | Number of tickets(n) | Pr(x) = n / 200 | xPr(x)

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350 | 1 | 0.005 | 1.75

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0 | 199 | 0.995 | 0

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Step 2:

Calculate the expected prize.

The expected prize is

`\sum \text{xPr(x) = 1.75 + 0 = \$1.75}`

Step 3:

Calculate the expected profit

the expected profit = the expected prize - $6

therefore,

the expected profit = $1.75 - $6.00 = -$4.25

the expected profit = - $4.25