Suppose that next year the U.S. will be in one of the following economic conditions: Boom, Moderate Growth, Recession, or Depression. The probability that each economic condition will occur, and that a jewelry store will earn profits within that broader economic condition are listed below:
Economic Condition Probability Jewelry Store Profits
Boom 0.40 $400,000
Moderate Growth 0.30 $300,000
Recession 0.20 $100,000
Depression 0.10 -$500,000
The expected profit of the jewelry store during the next year is
e) None of the above
Take the expected profits in each economic condition and ...
The expert examines the expected profits for broader economic conditions.