A contractor is considering a sale that promises a profit of $24,000 with a probability of 0.7 or a loss (due to bad weather,strikes,and such)of $16,000 with a probability of 0.3.What is the expected profit?
A)$8000
B)$16,800
C)$28,000
D)$21,600
E)$12,000

Question

Quizplus · Accepted Answer

The expected profit is calculated by multiplying each outcome by its probability and then summing these products. Here, it's (0.7 * $24,000) + (0.3 * -$16,000) = $16,800 - $4,800 = $12,000.

A Contractor Is Considering a Sale That Promises a Profit