4-9 please. The weather information comes from the table that is above the quest

Question

4-9 please. The weather information comes from the table that is above the question (with the wed, cold / 5000, etc.)

Thanks!

following table. He also finds out from the local weather office the weather has been like, for June days in the past 10 years Relative Weather Attendance Frequency wet, cold 5,000 .20 20,000 wet, warm .20 dry, cold 30,000 .10 dry, warm 50,000 ,50 a. What is the expected (mean) attendance? b. The tickets will sell for $9 each. The costs will be $2 per person for cleaning and crowd control, plus $150,000 for the band, plus $60,000 for administration (including the facilities). Would you advise the producer to go ahead with the concert, or not? Why? 4-9 In Problem 4-8, suppose the producer has gone ahead with his plans and on June 10 has obtained some rather gloomy long-run weather forecasts: The 4 weather conditions now have probabilities .30, .20, .20, and .30, respectively. If he cancels the concert, he will still have to pay half of the $60,000 administration cost, plus a $15,000 cancellation penalty to the band Would you advise him to cancel or not?

Explanation / Answer

expected loss if he cancels the corcert =30000+7500=$37500

here expected attendance =26500

hence expected profit/loss =revenue-cost =9*26500-2*26500-150000-60000 =$-24500

as expected loss by running the concert is low in comparison to cancelling it. He must not cancel it.

attendence(x) P(x) xP(x) 5000 0.3 1500.000 20000 0.2 4000.000 30000 0.2 6000.000 50000 0.3 15000.000 26500.000

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