Question

Five thousand tickets are sold at​ $1 each for a charity raffle. tickets are to be drawn at random and monetary prizes awarded as​ follows: 1 prize of ​$500​, 3 prizes of ​$300​, 5 prizes of ​$30​, and 20 prizes of​ $5. what is the expected value of this raffle if you buy 1​ ticket?

Answer 1

Expected value of raffle = $-0.67

Step-by-step explanation:

Number of tickets sold = 5,000

Selling price of each ticket = $1

1 prize = $500

3 prizes = $300

5 prize = $30

20 prizes = $5

The value of each ticket is given by

value = $500*(1/5000) + $300*(3/5000) + $30*(5/5000 + $5*(20/5000)

value = $0.1 + $0.18 + $0.03 + $0.02

value = $0.33

The expected value is

Expected value = value - selling price

Expected value = $0.33 - $1

Expected value = -$0.67

Therefore, the expected value of this raffle is -$0.67 if you buy 1​ ticket.

The negative sign means that you are most likely to lose $0.67 if you buy a raffle ticket for $1.