  A construction company is planning to bid on a building contract. The bid costs the company \$2000. The probability that the bid is accepted is one fifth(1/5). If the bid is​ accepted, the company will make ​\$47,500 minus the cost of the bid. A. What is the expected value in this situation? (round to the nearest dollar.)  B. Choose the statement below that best describes what this value means. A.In the long​ run, the construction company would expect to lose this amount on average per bid. B.In the long​ run, the construction company would expect to earn this amount on average per bid. C.In the long​ run, the construction company would expect to break even on average. D.None of the above.

Question

A construction company is planning to bid on a building contract. The bid costs the company \$2000. The probability that the bid is accepted is one fifth(1/5). If the bid is​ accepted, the company will make ​\$47,500 minus the cost of the bid.

A. What is the expected value in this situation? (round to the nearest dollar.)

B. Choose the statement below that best describes what this value means.

A.In the long​ run, the construction company would expect to lose this amount on average per bid.

B.In the long​ run, the construction company would expect to earn this amount on average per bid.

C.In the long​ run, the construction company would expect to break even on average.

D.None of the above.

Step 1

The bid cost of construction company on contract = \$2000

The amount company get if bid is accepted = \$47500

probability that bid is accepted = 1/5

probability that bid is not accepted = 4/5

amount gained by construction company if b...

Want to see the full answer?

See Solution

Want to see this answer and more?

Our solutions are written by experts, many with advanced degrees, and available 24/7

See Solution
Tagged in

Basic Probability 