Question

a 7. Sammi plans on selling Christmas tree ornaments. She figured a profit of $2.00 for each item. She thinks one item out of every fifty may be defective and returned for exchange. That will cost her $7.00 because of shipping and cost of the replacement. Calculate the expected value. - $1.82 $2.18 $1.82 - $2.18 $0.18​

Answer 1

The expected value of selling Christmas tree ornaments, with a $2.00 profit per item and a $7.00 loss per defective item returned, is $1.82.

Step-by-step explanation:

The student is asking for help with calculating the expected value of profit for selling Christmas tree ornaments. To find the expected value, we consider the profits and losses from non-defective and defective items, respectively.

For non-defective items, she makes $2.00 profit per item. Since there is a 1 in 50 chance of an item being defective and incurring a $7.00 loss (from shipping and replacement), we must calculate the average expected profit taking both scenarios into account.

We consider the probability of selling 49 non-defective items at a $2.00 profit and 1 defective item at a $7.00 loss out of 50 total items:

• (49/50) * $2.00 = $1.96
• (1/50) * -$7.00 = -$0.14

Adding these amounts gives us the expected value of $1.96 - $0.14 = $1.82.