QUESTION 16 The enrollment in a course offered by the College of Business is ran
ID: 3152255 • Letter: Q
Question
QUESTION 16 The enrollment in a course offered by the College of Business is random and is described by the following probability distribution: there is a 7% chance of 17 students, 24% chance of having 30 students, 29% chance of having 35 students, and otherwise there are 49 students. Suppose it costs the university $5600 to offer a section of a class (regardless of the number of students enrolled - so this is a "fixed cost") and tuition is $300 per student per class. What is the expected profit or loss for the University on this class?
Explanation / Answer
THE DISTRIBUTION TABLE WILL BE MADE FOR THIS WHERE X WILL SHOW THE NUMBER OF STUDENTS IN CLASS
X P(X)
17 0.07
30 0.24
35 0.29
49 0.40
THE EXPECTED MEAN = E(X) = X1*P(X1)+X2*P(X2)+....+XN*P(XN)
THEREFORE E(X) = 17*0.07+30*0.24+35*0.29+49*0.40 = 38.14 = 38
THE COST OF CLASS = 5600
THE REVENUE FROM CLASS = 38*300 = 11400
PROFIT = 11400 - 5600 = 5800
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