A children's cancer center sells 150 raffle tickets to raise money. Tickets cost $100 each. One ticket will be drawn at random for the $8,000 prize: a new men's Rolex watch.
A second hospital is also conducting a benefit raffle to raise funds. They have 8000 tickets that also cost $100 each, and one ticket will be drawn at random also for a $350,000 prize-a new custom home. Which raffle has the best value for you per ticket?

Question

Quizplus · Accepted Answer

In order to determine the expected net value per ticket, we need to calculate the probability of winning and the amount of money gained or lost. For the first raffle, the probability of winning is 1/150 and the net gain is $7,900 ($8,000 prize minus the $100 cost of the ticket). Therefore, the expected net value per ticket is (1/150) x $7,900 = $52.67. For the second raffle, the probability of winning is 1/8000 and the net gain is $349,900 ($350,000 prize minus the $100 cost of the ticket). Therefore, the expected net value per ticket is (1/8000) x $349,900 = $43.74. Since the expected net value per ticket is higher for the first raffle, it is the better choice.

A Children's Cancer Center Sells 150 Raffle Tickets to Raise