Question

In a raffle where 6000 tickets are sold for $2 each, one prize of $6600 will be awarded. What is the expected value of a single ticket in the raffle?

Answer 1

The expected value is the sum of the products of the probability of each outcome and the payout for that outcome:

Probability of winning:

`(1)/(6000)`

Payout for winning:

`6600-2=6598`

Probability of not winning:

`(5999)/(6000)`

Payout for not winning:

`-2`

Therefore:

`E=((1)/(6000)\cdot6598)+((5999)/(6000)\cdot-2)=-0.9`

Answer:

The expected value of a single ticket is -$0.9