Question

A raffle has a grand prize of a European cruise valued at $15000 with a second prize of a weekend in San Diego valued at $1500. If each ticket costs $4 and 12000 tickets are sold, what are the expected winnings for a ticket buyer

Answer 1

Answer:

Explanation:

Grand prize = $15,000

Second prize = $1,500

Number of tickets sold = 12,000

The probability of getting the grand prize ($15,000) is 1/12,000

The probability of getting the second prize ($1,500) is 1/12,000

Each ticket costs $4

Expected value is -4 + 1/12,000 X 15,000 + 1/12,000 X 1,500

= -1.5.

The expected winnings for a ticket buyer is therefore -$1.5