A raffle sells 100 tickets at $2 apiece. There is one $500 prize, five $100 prizes, and ten $50 prizes.
What is the expected value
Impossible!
The raffle takes in $200 and pays out $1500?
The expected value is a measure of the average amount you can expect to win in a raffle. To calculate the expected value, we need to multiply the probability of each prize by its corresponding value and sum them up.
Let's start by calculating the probability of winning each prize. The total number of tickets sold is 100, so the probability of winning the $500 prize is 1/100. Similarly, the probability of winning each $100 prize is 5/100, and the probability of winning each $50 prize is 10/100.
Now let's calculate the expected value:
Expected value = (Probability of winning $500 prize × $500) + (Probability of winning $100 prize × $100) + (Probability of winning $50 prize × $50)
Expected value = (1/100 × $500) + (5/100 × $100) + (10/100 × $50)
Expected value = $5 + $5 + $5
Expected value = $15
Therefore, the expected value of participating in this raffle is $15. This means, on average, you can expect to win $15 if you were to participate in the raffle multiple times.