Question

A specialty store sells items that are priced at exactly $3, $5, or $10. The store manager figures that 16% of inventory is priced at $3, 32% is priced at $5, and 52% is priced at $10. With this in mind, what is the average price of any item in the store?

Answer 1

7.28

Explanation:

0.16 * 3 = 0.48

0.32 * 5 = 1.6

0.52 * 10 = 5.2

The sum of all these numbers gives you 7.28

Answer 2

$7.28

Explanation:

The average price, or the expected price, of any item in this specialty store is given by the weighted average of each item's price. That is, the sum of the products of each individual price by its corresponding sales mix:

`AP =(0.16*\$3)+(0.32*\$5)+(0.52*\$10)\\AP=\$7.28`

The average price of any item in the store is $7.28