Question

A raffle offers a first prize of​ $1000, 2 second prizes of​ $300, and 20 third prizes of​ $10 each. If 20000 tickets are sold at 50 cents ​each, find the expected winnings for a person buying 1 ticket.

Answer 1

The expected wining from 1 ticket will be −41 cents.

Explanation:

Consider the provided information.

A raffle offers a first prize of $1000, 2 second prizes of $300, and 20 third prizes of $10 each.

Out of 20000 tickets the probability of not winning is:

`1-(1+2+20)/(2000)=1-(23)/(20000)=(19977)/(20000)`

The expected value of gain or loss is:

`EV=\sum P(x_i)* X_i`

`EV=1000*(1)/(20000)+300*(2)/(20000)+10*(20)/(20000)-0.50*(19977)/(20000)`

`EV=0.05+0.03+0.01-0.499425`

`EV\approx-0.41`

The expected wining from 1 ticket will be −41 cents.