Question

If a person wants to buy a raffle ticket, they can win a first prize of $ 500 or a second prize of $ 200 with odds of: 0.01 and 0.03 respectively.

1. How much would you expect to pay for the ticket?

1.1

11

19

370

2. What is the probability of obtaining a prize?

0.01

0.03

0.04

0.96

3. What is the probability of not getting any prize?

0.001

0.996

0.004

0.96

Answer 1

Question (a)

Given that If a person wants to buy a raffle ticket, they can win a first prize of $ 500 or a second prize of $ 200 with odds of: 0.01 and 0.03 respectively.

Probability of winning a first prize of $ 500 = 0.01

Probability of winning a second prize of $ 200 = 0.03

Expected value for the ticket = 500 * 0.01 + 200 * 0.03

= 5 + 6

= $11

Question (b)

Probability of obtaining a prize = 0.01 + 0.03

= 0.04

Question (c)

Probability of not obtaining a prize = 1 - 0.04

= 0.96