Lemminburg Plastics estimates a 60% probability that sales of pink flamingo lawn ornaments in the summer of 2011 will be 45,000 units, about the same as in 2010. They believe there is a 20% probability that they will go viral and potential sales would be 90,000. There is also a 20% probability that restrictive zoning ordinances will limit sales to 30,000 units. Expected unit sales of the pink flamingos are
A) 55,000
B) 51,000
C) 67,500
D) 60,000

Question

Quizplus · Accepted Answer

To calculate the expected unit sales, multiply each sales figure by its probability and sum the results: (0.60 * 45,000) + (0.20 * 90,000) + (0.20 * 30,000) = 27,000 + 18,000 + 6,000 = 51,000.

Lemminburg Plastics Estimates a 60% Probability That Sales of Pink