Consider the following to answer the question(s) below:
A company believes that there will be a 50% chance of making a profit of $1,000, a 30% chance of making a profit of $1500 and a 20% chance of making a profit of $2,000.
-What is the expected profit?
A) $1,000
B) $300
C) $2,000
D) $1,350
E) $4,500

Question

Quizplus · Accepted Answer

We can calculate the expected profit by multiplying the probability of each profit amount by its corresponding profit and then summing the results:
Expected profit = (0.5 * 1000) + (0.3 * 1500) + (0.2 * 2000) = 500 + 450 + 400 = $1,350. Therefore, the best choice is D.

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