A rock concert producer has scheduled an outdoor concert. The producer estimates

Question

A rock concert producer has scheduled an outdoor concert. The producer estimates the attendance will depend on the weather according to the following table. Weather wet & cold= Attendance 5000 Probability 0.1, Weather wet & warm= Attendance 20000 Probability 0.1, Weather dry & cold = Attendance 30000 Probability 0.2, Weather dry & warm= Attendance 60000 Probability 0.6. What is the expected attendance, and if tickets cost $25 each, the band will cost $250000, plus $450000 for administration. What's the expected profit?

Explanation / Answer

solution:-

(a) The expected attendance = SUM (Att x prob)
= 5000 * 0.1 + 20000 * 0.1 + 30000 * 0.2 + 60000* 0.6
= 500 + 2000 + 6000 + 36000 = 44500

(b)Total cost = $250000 + $450000 = 700000
Total receipts = 44500 * 25 = $1112500
Therefore Expected Profit = $1112500 - $700000 = $412500

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