Determine expected value of each winnings

[Kristinanne]

1. Homework Statement [/b]

A charitable organization is raffling a trip worth $500 to raise money and needs to decide which of the following scenarios would be the most profitable based on expected value of the proposed game.

Case A: 3,000 tickets are sold at $1.00 each.

Case B, 2,000 tickets are sold at $2.00 each.

1. Determine the expected value for the winnings of the players in Case A.
2. Determine the expected value for the winnings of the players in Case B.

Homework Equations

The Attempt at a Solution

To do this, wouldn't I have to know what the payout is?

 

[LowlyPion]

You don't think the payout is the $500 trip?

 

[Kristinanne]

I was thinking that. That would make a and b $500.00 then correct?

 

[LowlyPion]

That would be the total payout for the raffle.

For each dollar though what is the expected return to each ticket holder taking into account their chance of winning?

 

[LowlyPion]

For instance if I buy a ticket for $1 in a lottery with a 1:1,000,000 chance of winning - 1M tickets sold - then my expected winning is $1 return.

I only have one chance of winning ... but if I do I get $1,000,000 right?