Suppose that a raffle ticket costs $10 and has a jackpot of $2,500. For this raffle to be considered a fair gamble, the probability of not winning must be:
A) 40 percent.
B) 60 percent.
C) 96 percent.
D) 99.6 percent.
E) 99.96 percent.

Question

Quizplus · Accepted Answer

For a fair gamble, the expected value should be zero. If the ticket costs $10 and the jackpot is $2,500, the probability of winning should be 0.004 (1/250) to make the expected value zero. Therefore, the probability of not winning is 1 - 0.004 = 0.996 or 99.6 percent.

Suppose That a Raffle Ticket Costs $10 and Has a Jackpot