Question

4. (5 points) A raffle awards one $7000.00 prize, two $1000.00 prizes, and four $500.00 prizes. There are 10000 tickets sold at $3 cach. What is the expected profit a player carns from purchasing a ticket?

Answer 1

Let X be the profit a player earns from purchasing a ticket

X can take values like { $6997, $997, $497, -$3}

Probability table for x can be showna s follows

X	6997	997	497	-3
P(X=x)	1/10000 = 0.0001	2/10000 =0.0002	4/10000 =0.0004	9993/10000 =0.9993

Expecetd profit , E(X) = $\sum x P(X)$

= 6997 *0.0001 + 997 * 0.0002 + 497*0.0004 + (-3)*0.9993

= -1.9

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