Suppose that a raffle ticket costs $5 and has a jackpot of $1 million. For this raffle to be considered a fair gamble, the probability of not winning must be:
A) 99.95 percent.
B) 99.995 percent.
C) 99.9995 percent.
D) 99.99995 percent.
E) None of the above.

Question

Quizplus · Accepted Answer

For a fair gamble, the expected value should equal the cost of the ticket. If the jackpot is $1 million and the ticket costs $5, the probability of winning should be 0.000005 (or 0.0005%) to make the expected value $5. Therefore, the probability of not winning is 1 - 0.000005 = 0.999995 or 99.9995%.

Suppose That a Raffle Ticket Costs $5 and Has a Jackpot