Answer:
a) The orchard owner's expected profit from driving the route is $33.
b) The standard deviation of the profit is $27.28
Step-by-step explanation:
a) Data and Calculations:
Apples to sell = 4 half-bushels
Price of each half-bushel sold = $40
Sales revenue = $160 ($40 *4)
Cost of driving the route = $15
Expected values:
Event Probability Revenue Profit Expected Profit
No Sales 40% $0 ($15) ($0 - $15) ($6.00)
Selling 1 half-bushel 30% $40 $25 ($40 - $15) $7.50
Selling 2 half-bushels 10% $80 $65 ($80 - $15) $6.50
Selling 3 half-bushels 10% $120 $105 ($120 - $15) $10.50
Selling 4 half-bushels 10% $160 $145 ($160 - $15) $14.50
Total expected profit = $33
Event Expected Profit Mean Squared
Difference
No Sales ($6.00) -39 1,521
Selling 1 half-bushel $7.50 -25.5 650.25
Selling 2 half-bushels $6.50 -26.5 702.25
Selling 3 half-bushels $10.50 -22.50 506.25
Selling 4 half-bushels $14.50 -18.50 342.25
Sum of squared differences 3,722
Mean of squared differences = 744.4 (3,722/5)
Standard deviation = square root of the mean
= 27.28
= $27.28
