Question

Please help! i would really appreciate it. (this is AFM btw)

a department store wants to sell eight purses that cost the store $40 each and 32 purses that cost the store $10 each. If all purses are wrapped in forty identical boxes and if each customer picks a box randomly, find:
(a) each customer's expected value if a customer pays $15 for a box.
(b) the department store's total expected profit (or loss) during this sale.

Answer 1

8@40=320
32@10=320
40@15=600
Lost magain is 40 dollars

Answer 2

Loss of 40 dollars

$16 expected value.

Explanation:

If you multiply the number of 40 dollar purses and the number of the 10 dollar purses you´ll end up with something like this:

40*8=320

32*10=320

The total cost of the purses to the store is $640

If you multiply the selling cost of the purses by the number of purses you´ll end up with:

15*40=600

THat means that the cost is $40 higher than the expected earnings with the sell.

And to get the customer expected value you divide the $640 value of the purses by the 40 purses to obtain $16 in customer expected value.