An architect is considering bidding for the design of a new shopping mall. The cost of drawing plans and submitting a model is $10,000. The probability of being awarded the bid is 0.13, and the anticipated profits are $100,000. What is the expected value in this situation?
is it 3000?
I did 100,000-10,000=90,000
Stacey Warren - Expert brainly.com
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I am not too sure about this but I believe the answer should be $11700?
because the expected value of the bidding design of $3000 shouldn't be lower than it's cost and plans. I'm not too sure on this one.
@apoorvk can you verify? ;D
11,700 is an option too.
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@monroe17 your explanation and answer seem pretty correct to me, still @Callisto would know probability and stuff better. (Am having trouble regarding 'expected value' means in this context).
Save me Callisto:D
hmm, anything? :)
@ash2326 to the rescue!
LOL, lets call everyone lmao.
Lets DO IT! ;) I feel like this question isn't even really that hard though?
@experimentX @Diyadiya @dpaInc !!!!!!!!!!!!!!
expected value of what??
According to Wiki,
= amount paid x P(lose) + payoff x P(win)
= -10000 x (1-0.13) + (100000-10000) x (0.13)
= -10000 x 0.87 + 90000 x 0.13
If I got the term 'payoff' correct, then that's it.
The first one is about the probability of loss the game.
The second one is about the probability of winning it. But to win it, you have a price to pay. So, you need to subtract it from the amount you get to get the net profit.
I guess only.
Welcome. Sorry I had some other things to do and was not able to reply.