Question

A sales clerk at a car stereo store works for commission only. If 15% of the people purchase an item where the clerk gets a $3 commission, 30% purchase an item where the clerk gets a $5 commission, and if 55% purchase an item where the clerk gets an $8 commission, what is the expected value per customer who enters the store?

Answer 1

The expected value per customer = $6.35.

Explanation:

The probability for a $3 commission = 15% = 0.15.

The probability for a $5 commission = 30% = 0.30.

The probability for a $8 commission = 55% = 0.55.

So, the expected value per customer = 3(0.15) + 5(0.30) + 8(0.55)

= 0.45 + 1.50 + 4.40

= 6.35.

Hence, the expected value per customer = $6.35.