Question
A raffle has a $500 first prize, two $100 second prizes and five $25 third prizes. If 500 tickets are sold for $5 each find the expected value of buying a single ticket.
Answers
bobpursley
EV=500*(1/500)+100(2/500)+25(5/500)
That is the EV of the prizes, technically, one then should subtract the $5 cost of the ticket, yielding EV of buying a ticket.
EV=1+.40+.25-5=-3.35
That is the EV of the prizes, technically, one then should subtract the $5 cost of the ticket, yielding EV of buying a ticket.
EV=1+.40+.25-5=-3.35