One thousand raffle tickets are sold for $2.00 each. One grand prize of $800 and two consolation prizes of $100 each will be awarded. Jeremy purchases one ticket. Find his expected value.

Question

anonymous · Answer

$-1
Total prizes: $1000
Total tickets: $1000
prize/ticket = $1
Price paid = $2
$1-$2 = -$1

anonymous · Answer

Result                      Net outcome      Probability
Win grand prize        $798                  1/1000
Win consol. prize       $98                    2/1000
Lose                         $-2                     997/1000

Multiply net outcome by probability and add
798*1/1000   + 98*2/1000   + -2*997/1000  = $-1