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 Store Profits
Boom 0.4 $ 400,000.00
Moderate Growth 0.3 $ 300,000.00
Recession 0.2 $ 100,000.00
Depression 0.1 $ (500,000.00)
The expected profit of the jewelry store during the next year is?

Answer 1

Answer:

$ 320,000

Explanation:

The expected profit of the jewelery can be calculated by Hope, a statistical concept that consists of the sum of the product of each probability of exit of the experience by its respective value.

Thus, the expected profit of the jewelry store will be: $ 320,000

Hope [(0.4) x 400,000 + (0.3) x 300,000 + (0.2) x100,000 + (0.1) x 500,000)] = 160,000 + 90,000 + 20,000 + 50,000 = $ 320,000

Answer 2

The expected profit of the jewelry store during the next year is  $320,000.

Further explanation

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, Store Profits

• Boom, 0.4, $ 400,000.00
• Moderate Growth, 0.3, $ 300,000.00
• Recession, 0.2, $ 100,000.00
• Depression, 0.1, $ (500,000.00)

The expected value of a discrete random variable is the average of all possible values weighted by the probability of each outcome

A discrete random variable takes a finite set of possible values. For example, flipping a fair coin produces only two possible outcomes.

The expected profit for the store is sum of expected profit in each economic condition.

$= (0.4* 400,000.00)+ (0.3* 300,000.00) + (0.2*100,000.00) + (0.1*500,000.00) = 22,000$

Therefore the expected profit of the jewelry store during the next year is $320,000.

Learn more

1. Learn more about The expected profit brainly.com/question/3316979
2. Learn more about Economic Condition brainly.com/question/11895611
3. Learn more about Recession brainly.com/question/8395694

Answer details

Grade:  9

Subject:  business

Chapter:  economic conditions

Keywords: Boom, Moderate Growth, Recession, Depression, The expected profit