A school raffle sells 1,000 tickets at $1 each for a $350 bookstore credit.If Ramona buys one ticket,what is her net expected value for this gamble?
A) -$0.65
B) -$0.20
C) -$350
D) -$0.001
E) $0.35

Question

Quizplus · Accepted Answer

The expected value is calculated by multiplying the value of each outcome by its probability and then summing these products. If Ramona buys one ticket, the probability of winning is 1/1000, and the probability of losing is 999/1000. If she wins, her net gain is $349 ($350 prize minus the $1 ticket cost). If she loses, her net loss is $1 (the cost of the ticket). Thus, the expected value (EV) is: EV = (1/1000)*$349 + (999/1000)*(-$1) = $0.349 - $0.999 = -$0.65.

A School Raffle Sells 1,000 Tickets at $1 Each for a $350