A lawyer believes that the probability is .3 that she can win a discrimination suit. If she wins the case, she will make $400,000; but if she loses, she gets nothing. Assume that she has to spend $75,000 preparing the case. What is her expected gain?
A) $325,000
B) $45,000
C) $150,000
D) $22,500

Question

Quizplus · Accepted Answer

μ_x = .7(−75,000) + .3(325,000) = −52,500 + 97,500 = 45,000

A Lawyer Believes That the Probability Is