The decision tree shows the profit outcomes for a toy store in a strong and a weak economy for next year. What is the expected value of the store's profit in a strong economy?
A) $10,500
B) $15,000
C) $16,000
D) $30,000

Question

The decision tree shows the profit outcomes for a toy store in a strong and a weak economy for next year. What is the expected value of the store's profit in a strong economy? 
A) $10,500 
B) $15,000 
C) $16,000 
D) $30,000

Quizplus · Accepted Answer

D) The expected value for the store is not affected by the probabilities themselves. All of the $30,000 profit expected in a strong economy will be realized if the economy is actually strong, which according to the data has only a 35 percent chance of occurring.

The Decision Tree Shows the Profit Outcomes for a Toy