For a fundraiser, 1000 raffle tickets are sold and the winner is chosen at random. There is only one prize, $500 in cash. You buy one ticket.
(a) What is the probability you will win the prize of $500?
(b) Your expected earnings can be found by multiplying the value of the prize by the probability you will win the prize. What are your expected earnings?
(c) If a ticket costs $2, what is the difference between your “costs” and “expected earnings”? How much are you effectively contributing to the fundraiser?