Question

Suppose that an antique jewelry dealer is interested in purchasing a gold necklace for which the probabilities are 0. 22, 0. 36, 0. 28, and 0. 14, respectively, that she will be able to sell it for a profit of $250, sell it for a profit of $150, break even, or sell it for a loss of $150. What is her expected profit?.

Answer 1

(250 * 0.22) + (150 * 0.36) + (0 * 0.28) + (-150 * 0.14) = 88

Step-by-step explanation:

The expected profit of a scenario can be found by adding up the result of each possibility by the probability of that possibility happening.

So, in the answer,

(250 * 0.22) represents the 22% chance (0.22) of making $250 in profit

and (-150 * 0.14) represents the 14% chance (0.14) of losing $150