If 1000 raffle tickets were sold for a TV prize that is worth $275 and a ticket number is drawn to determine the winner, what is the expected value of the raffle?
To calculate the expected value of the raffle, you need to multiply the probability of winning by the value of the prize, and subtract the cost of purchasing a raffle ticket.
In this case, there were 1000 raffle tickets sold, so the probability of winning is 1 in 1000, or 1/1000.
The value of the TV prize is $275.
The cost of purchasing a raffle ticket is not provided in the question. To find the expected value, we need this information. Let's assume for now that each raffle ticket costs $2.
To calculate the expected value, you can use the following formula:
Expected Value = (Probability of Winning) × (Value of the Prize) - (Cost of the Ticket)
Expected Value = (1/1000) × ($275) - ($2)
Expected Value = $0.275 - $2
Expected Value = -$1.725
Hence, the expected value of the raffle is -$1.725, which means, on average, participants can expect to lose $1.725 for each ticket purchased.