Question

Out of 1,000 tickets in a raffle, one ticket will win a $710 prize. The rest will win nothing. If you have a ticket, what is the expected payoff?

Answer 1

The probability of winning = 0.001 and hence the expected payoff = $0.

Explanation:

There is a lottery contest and there are 1000 entries.

Only one will win and will get a prize of $710. All others would be given nothing.

We have to find the probability of the person winning.

Probability =
`(number of favorable events)/(total number of events)`

Number of favorable events = 1

Total number = 1000

So probability of winning the payoff =
`(1)/(1000)` = 0.001

Hence the expected payoff = $0