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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 100,00010,000=90,000
10,000(0.87)+90,000(0.13)=3,000?
 one year ago
 one year ago
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 100,00010,000=90,000 10,000(0.87)+90,000(0.13)=3,000?
 one year ago
 one year ago

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JayDSBest ResponseYou've already chosen the best response.0
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.
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
@apoorvk can you verify? ;D
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
11,700 is an option too. A $11,700 B $12,000 C $13,000 D $3,000
 one year ago

apoorvkBest ResponseYou've already chosen the best response.0
@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).
 one year ago

apoorvkBest ResponseYou've already chosen the best response.0
@ash2326 to the rescue!
 one year ago

JayDSBest ResponseYou've already chosen the best response.0
LOL, lets call everyone lmao.
 one year ago

monroe17Best ResponseYou've already chosen the best response.1
Lets DO IT! ;) I feel like this question isn't even really that hard though?
 one year ago

apoorvkBest ResponseYou've already chosen the best response.0
@experimentX @Diyadiya @dpaInc !!!!!!!!!!!!!!
 one year ago

experimentXBest ResponseYou've already chosen the best response.0
expected value of what??
 one year ago

CallistoBest ResponseYou've already chosen the best response.4
According to Wiki, Expected value = amount paid x P(lose) + payoff x P(win) = 10000 x (10.13) + (10000010000) x (0.13) = 10000 x 0.87 + 90000 x 0.13 = 3000 If I got the term 'payoff' correct, then that's it. Source: wiki
 one year ago

CallistoBest ResponseYou've already chosen the best response.4
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.
 one year ago

CallistoBest ResponseYou've already chosen the best response.4
Welcome. Sorry I had some other things to do and was not able to reply.
 one year ago
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