BM1704

Name: Date: 01/21/2023

Section: Score:

I. PROBLEM SOLVING. Solve for the expected values of the following. (40 points)

1. The Bubble Tea Café wants to use advertisements in order to increase sales. They are
currently choosing between two (2) advertising media: magazine ads and a YouTube ad. The
expected profit, in millions, is summarized in the two (2) tables below:

Decision A: Magazine ad Decision B: Youtube Ad

Profit Probability 𝑃𝑖𝑖𝑥𝑖𝑖 𝑃𝑖𝑖 [𝑥𝑖𝑖 − 𝐸 (𝑥)]2 Profit Probability 𝑃𝑖𝑖𝑥𝑖𝑖 𝑃𝑖𝑖 [𝑥𝑖𝑖 − 𝐸 (𝑥)]2
(𝑥𝑖𝑖 ) (𝑃𝑖𝑖) (𝑥𝑖𝑖 ) (𝑃𝑖𝑖)
30 0.05 1.5 20 30 0.10 3 45
40 0.20 8 20 40 0.25 10 25
50 0.50 25 0 50 0.30 15 0
60 0.20 12 20 60 0.25 15 25
70 0.05 3.5 20 70 0.10 7 45
σ =80
2
𝐸 (𝑥) = 𝜎 = 130
2
𝑥
𝐸 (𝑥) = 50

 Compute for the expected value of each probability in each decision. (10
items/probabilities x 2 points)
 Compute for the variance in each of the decisions. (10 items/probabilities x 2 points)

12 Seatwork 1 *Property of STI

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