Ms B.

asked • 09/24/16

You work for a company that wants to start making money an selling game systems.Out of every 100 systems,one is faulty an will need repair.

Please help!

Ms B.

The company will make 4$ profit on every working system but lose 250$ for every faulty system.Find the expected value from selling the systems.Should the company start making an selling the systems?explain your reasoning.
Report

09/24/16

1 Expert Answer

By:

MICHAEL S. answered • 09/25/16

Tutor
5.0 (332)

Highly-experienced Calculus, Economics, and Statistics Tutor
About this tutor ›
About this tutor ›
The expected value is the sum of the weighted payouts. In this case, you will receive $4 for 99/100 units. You will lose $250 for every 1/100 units.
 
The expected payout, E(X) = ∑ Xi * pi
 
Where Xi is the payout. Pi is the probability of that payout.
X1 = $4
p1 = 0.99
X2 = -$250
p2 = 0.01
 
 
Upvote • 0 Downvote
More
Report

Ms B.

I'm sorry I Ment to put a thumbs up!
Report

09/25/16

Ms B.

Could you write this so I understand a bit better
Report

09/25/16

Still looking for help? Get the right answer, fast.

Ask a question for free

Get a free answer to a quick problem.
Most questions answered within 4 hours.

OR

Find an Online Tutor Now

Choose an expert and meet online. No packages or subscriptions, pay only for the time you need.