Question

answer At a carnival, there is a raffle with 500 tickets. One ticket will win a $860 prize, one ticket will win a $720 prize, one ticket will win a $700 prize, one ticket will win a $610 prize, and the other tickets will win nothing. If you have a ticket, what is the expected payoff

Answer 1

Answer: The expected payoff is $5.78

The total tickets = 500

P($860) = 1/500

P($720) = 1/500

P($700) = 1/500

P($610) = 1/500

P($0) = 496/500

E(X) = $860*1/500 + $720* 1/500 + $700* 1/500 + $610 * 1/500 + 0*496/500

E(X) = 860* 0.002 + 720*0.002 + 700 * 0.002 + 610 * 0.002 + 0

E(X) = 1.72 + 1.44 + 1.4 + 1.22 + 0

E(X) = $5.78