SOLUTION: Don’t even know if this is the right category... what is the expected value of a raffle ticket purchased for $4 if 1000 tickets are sold, the grand prize is valued at $750, an

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Question 1158979: Don’t even know if this is the right category...
what is the expected value of a raffle ticket purchased for $4 if 1000 tickets are sold, the grand prize is valued at $750, and there are five second place prizes each valued at $250?

Answer by ikleyn(52803)   (Show Source): You can put this solution on YOUR website!
.

Probability to win $750 is  .


Probability to win either of five prizes at $250 is .


Hence, the money expectation to win is   = .


From it, you should subtract  $4 which you pay for the ticket, and then you get expected value of the game  


     = - $2.00.


It is EXTREMELY unfair game.


Statistically, you lose $2.00 in each game.

Is everything clear to you ?



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