Answer:
The expected value is -$1.7
Step-by-step explanation:
Consider the provided information.
In a raffle where 2000 tickets are sold for $2 each,
One first prize of $400 and one second prize of $200 will be awarded.
Suppose you bought a ticket for $2 and win first price, Then the gain will be: $400-$2=$398
Suppose you bought a ticket for $2 and win second prize, then the gain will be:
$200-$2=$198
Suppose you bought a ticket for $2 and you got nothing, the the loss will be -$2.
The probability of getting first prize is: [tex]\frac{1}{2000}[/tex]
Because only one person is selected for first prize out of 2000.
The probability of getting second prize is: [tex]\frac{1}{2000}[/tex]
The probability of getting nothing is: [tex]\frac{1998}{2000}[/tex]
Hence the expected value is:
[tex]398\times \frac{1}{2000}+198\times \frac{1}{2000}-2\times \frac{1998}{2000}=-1.7[/tex]
Hence, the expected value is -$1.7
