Question

There are three cell phone models in a store. When selecting a new cell phone, 25% of the customers choose model A, 33% choose model B, and 32% choose model C. The remaining customers buy from an old collection on which the average profit is $50. If the average profit earned on models A, B, and C is $60, $75, and $40, respectively, what is the expected value of the profit earned on all models?
a] $55.75

b] $57.55

c] $59.25

d] $60.25

Answer 1

The answer is B. or $57.55

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Answer 2

The required expected value of the profit earned on all models is $57.55. Option B is correct.

Given that,

There are three cell phone models in the store.
25% of the customers choose model A, 33% choose model B, and 32% choose model C.
The remaining customers buy from an old collection on which the average profit is $50 the average profit earned on models A, B, and C is $60, $75, and $40, respectively.

What is average?

The average of the values is the ratio of the total sum of values to the number of values.

Here, as per the question,
Customers who chooses old model = 100 - 25 + 33 + 32
                                                            = 10%

The expected value of the profit earned on all models,
= 0.1 *50 +0.25 * 60 + 0.33 * 75 + 0.32 * 40
= 5 + 15 + 24.74 +12.8
= 57.55

Thus, the required expected value of the profit earned on all models is $57.55. Option B is correct.

Learn more about average here:

brainly.com/question/24057012

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