question 15
a contractor is considering a sale that promises a profit of $29,000 with a probability of 0.7 or a loss (due to bad weather, strikes, and such) of $1,000 with a probability of 0.3. what is the expected profit?
a $21,000
b $28,000
c $20,300
d $20,000
5 points

Question

Accepted Answer

# Explanation:
## Step1: Recall the expected value formula
The formula for expected value $E(X)$ is $E(X)=\sum_{i}x_ip_i$. Here, $x_1 = 29000$, $p_1=0.3$, $x_2=- 1000$ (since it's a loss), $p_2 = 0.7$.
## Step2: Calculate the expected value
$$
\begin{align*}
E(X)&=(29000\times0.3)+(-1000\times0.7)\
&=8700 - 700\
&=8000
\end{align*}
$$
Wait, there seems to be a mistake. Let's re - check. The problem might have a typo. If we assume the loss is $-1000$ (as per the description "a loss (due to bad weather, strikes, and such) of $1000$"). But if we calculate again:

$$
\begin{align*}
E(X)&=(29000\times0.7)+(-1000\times0.3)\
&=20300-300\
&=20000
\end{align*}
$$

# Answer:
D. $\$20,000$

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QUESTION IMAGE

Question

Explanation:

Step1: Recall the expected value formula

Step2: Calculate the expected value

Answer: