What is Jeff's expected earnings from the concert?

Question

Jeff is producing an outdoor concert. He estimates that he will make 3500 dollars if it does not rain, and make 850 dollars if it does rain. The local weather station (which we'll assume is accurate in giving forecasts) predicts that the chance of rain is 16 percent for the day of the concert. What is Jeff's expected earnings from the concert?

Answer 1

If memory serves me correctly, Jeff's expected earnings from the concert is $3076. This is based on a 16% chance of earning $850 (.16 * 850) and a 84% chance of earning $3500 (.84 * 3500). Of course, if it snows instead, all bets are off.

Chris Jones