The enrollment in a course offered by the College of Business is random and is d

Question

The enrollment in a course offered by the College of Business is random and is described by the following probability distribution: there is a 6% chance of 19 students, 24% chance of having 28 students, 29% chance of having 37 students, and otherwise there are 48 students. Suppose it costs the university $6200 to offer a section of a class (regardless of the number of students enrolled - so this is a "fixed cost") and tuition is $310 per student per class. What is the expected profit or loss for the University on this class?

Explanation / Answer

Expected number of students who will take the admission

= 0.06*19 + 0.24*28 + 0.29*37 + 0.41*48

= 38.27 students

Therefore expected profit

= 310*Expected number of students - Fixed Cost

= 310*38.27 - 6200

= 5663.7

Therefore the expected profit here is $5663.7

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