Question

A charity organization hosts a raffle drawing at a fund raising event. The organization sells 2500 tickets at a price of $8 each. Winning tickets are randomly selected, with 30 prizes of $100, 10 prizes of $500, and 1 grand prize of $8000. Suppose you buy one ticket. Let the random variable X represent your net gain from playing the game once (remember that the net gain should include the cost of the ticket). Use the table below to help you construct a probability distribution for all of the possible values of X and their probabilities. Find the mean/expected value of X. (Round to two decimal places.) In complete sentences, describe the interpretation of what your value from #2 represents in the context of the raffle. If you were to play in such a raffle 100 times, what is the expected net gain? Would you choose to buy a ticket for the raffle? (Your response should be a short paragraph, written in complete sentences, to explain why or why not.) What ticket price would make it a fair game, so that, on average, neither the players nor the organizers of the raffle win or lose money? (Round to two decimal places.)

Answer 1

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