Purchase Solution

Expected Profits

Not what you're looking for?

Ask Custom Question

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
a) $250,000
b) $220,000
c) $190,000
d) $170,000
e) None of the above

Purchase this Solution
Solution Summary

The expert examines the expected profits for broader economic conditions.

Solution Preview

Take the expected profits in each economic condition and ...

Solution provided by:
Changping Wang, MA
Education
  • BSc , Wuhan Univ. China
  • MA, Shandong Univ.
Recent Feedback
  • "Your solution, looks excellent. I recognize things from previous chapters. I have seen the standard deviation formula you used to get 5.154. I do understand the Central Limit Theorem needs the sample size (n) to be greater than 30, we have 100. I do understand the sample mean(s) of the population will follow a normal distribution, and that CLT states the sample mean of population is the population (mean), we have 143.74. But when and WHY do we use the standard deviation formula where you got 5.154. WHEN & Why use standard deviation of the sample mean. I don't understand, why don't we simply use the "100" I understand that standard deviation is the square root of variance. I do understand that the variance is the square of the differences of each sample data value minus the mean. But somehow, why not use 100, why use standard deviation of sample mean? Please help explain."
  • "excellent work"
  • "Thank you so much for all of your help!!! I will be posting another assignment. Please let me know (once posted), if the credits I'm offering is enough or you ! Thanks again!"
  • "Thank you"
  • "Thank you very much for your valuable time and assistance!"
Purchase this Solution
Free BrainMass Quizzes
Multiplying Complex Numbers

This is a short quiz to check your understanding of multiplication of complex numbers in rectangular form.

Exponential Expressions

In this quiz, you will have a chance to practice basic terminology of exponential expressions and how to evaluate them.

Know Your Linear Equations

Each question is a choice-summary multiple choice question that will present you with a linear equation and then make 4 statements about that equation. You must determine which of the 4 statements are true (if any) in regards to the equation.

Graphs and Functions

This quiz helps you easily identify a function and test your understanding of ranges, domains , function inverses and transformations.

Probability Quiz

Some questions on probability

View More Free Quizzes
Related BrainMass Solutions

  • Expected Market Price & Profits

    Calculate the expected market price. b. What output should you produce in order to maximize expected profits? c. What are your expected profits? a. Calculate the expected market price.

  • Maximizing Expected Profits

    Calculate the expected market price B. What output should you produce in order to maximize expected profits? C. What are your expected profits? A. Calculate the expected market price.

  • Calculating Expected Price and Profits

    a.Calculate the expected market price. b.What output should you produce in order to maximize expected profits? c.What are your expected profits? Solution : a. Calculate the expected market price. Expected Price = 100*0.6+200*0.4=$140 b.

  • Electro Corporation expected annual profits, deviation, CV

    Illustrates how to calculate the expected profits, standard deviation of expected profits and coefficient of variation of annual profits.

  • Pricing strategy: High end versus low end customers

    If you decided to price high, what would be your expected profits per unit? 2. If you decided to price low, what would be your expected profits per unit? 3.

  • Finding optimal production level

    How many units should you produce to maximize expected profits? What is your expected profit or loss? How many units should you produce to maximize expected profits?

  • expected profits of introducing a new product

    The expected profits of introducing a new product are weighed in this solution.

  • Hedging and Expected Tax Saving

    after tax $10.400 $23.100 $37.100 Probability of state $0.333 $0.333 $0.333 Expected Profits $23.533 Expected tax $9.467 Expected savings in tax $3.667 Expected increase in profits after tax $6.667.

  • Probability and Business Decisions

    We can observe the profits made by the coffee brand in adjacent cities. We can know the probability distribution of profits in these cities. Generally the profits take the normal distribution with the expected profits Pi.

View More Related Solutions