Question

In a raffle where 9000 tickets are sold for $2 each, one prize of $4700 will be awarded. What is the expected value of a single ticket in the raffle?

Answer 1

Given:

9000 tickets are sold for $2 each

Prize = $4700

To determine the expected value of a single ticket in the raffle, we find first the probabilities for winning and losing.

The probability of winning is 1/9000, while the probability of losing is 8999/9000.

The expected gain is: $4700-$2=$4698

The expected lose is: -$2

Now, we compute for the expected value:

$\begin{gathered} =((4698)(\frac{1}{9000}))+((-2)(\frac{8999}{9000})) \\ \text{Calculate} \\ =-1.48 \end{gathered}$

Therefore, the expected value of a single ticket is -$1.48.