Question

Mme.​ Giselle's boutique in​ Cleveland, Ohio is planning to sell a Parisian frock. If the public view it as being the latest​ style, the frocks will be worth ​$10 comma 000. ​ However, if the frocks are viewed as​ passe, they will be worth only ​$2 comma 000. If the probability that they are stylish is 10​%, what is the expected value of the​ frocks? The expected value of the frocks​ (EV) is EVequals​$ nothing. ​(Enter your response rounded to two decimal​ places.)

Answer 1

the expected value of the frocks​ (EV) is 2800

Explanation:

the expected value of the frocks= (probability of stylish* worth)+(probability of passe* worth)

If the public view it as being the latest​ style, the frocks will be worth ​$10,000. ​

if the frocks are viewed as​ passe, they will be worth only ​$2,000.

If the probability that they are stylish is 10​%

probability of stylish = 10000

worth = 10%

probability of passe = 2000

`=10 \%*10000+(1-10 \%)*2000\\\\=0.1* 10000+(1-0.1)*2000\\\\=1000+(0.9)*2000\\\\=1000+1800\\\\=2800`

Therefore, the expected value of the frocks​ (EV) is 2800