Question

A non-profit organization plans to hold a raffle to raise funds for its operations. A total of 1,000 raffle tickets will be sold for $1.00 each. After all the tickets are sold, one ticket will be selected at random and its owner will receive $50.00. The expected value for the net gain for each ticket is -$0.95. What is the meaning of the expected value in this context?

A. The ticket owners lose an average of $0.05 per raffle ticket.
B. The ticket owners lose an average of $0.95 per raffle ticket.
C. Each ticket owner will lose $0.95 per raffle ticket.
D. A ticket owner would have to purchase 19 more tickets for the expected value of his or her net gain to increase to $0.00.
E. A ticket owner has a 95 percent chance of having a ticket that is not selected.

Answer 1

The answer is "Option b".

Explanation:

In the given question, 1000 ticket were sold for
`\$1` and the owner who receives tickets which are randomly chosen that wins
`\$50`.

`Net\ profit = 1000* 1-1*v 50 = \$950\\\\Net \ profit \ for\ ticket = (\$950)/(1000) = \$0.95`

The probability in which each ticket owners win
`= 0.001`

therefore the ticket owner net profit =
`= -1+0.001* 50 = -0.95\\\\`