Math CentralQuandaries & Queries


Question from melanie, a student:

The probabilities are 0.24 , 0.35 , 0.29 , and 0.12 that a speculator will be able to sell a subdivision lot within a year at a profit of P120, 500 , at a profit of P80,000 , at a profit of P40,000 , or at a lost of P60,000 respectively . What is his expected profit ?

Hi Melanie,

In statistical language you have a random variable, profit, which can take on any of 4 possible values. You also have the probabilities that the random variable takes on each of the 4 values. To find the expected value of the random variable, multiply each possible value by its probability and add the 4 resulting number.

Write back if you need more assistance.


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