The following table shows the probability function of X = the number of cups of

Question

The following table shows the probability function of X = the number of cups of hot chocolate sold on a cool day: Calculate the expected number of cups sold Calculate the standard deviation of the number of cups sold. Suppose you must prepare the same a mount of hot chocolate, no matter what your sales are, and that it costs a total of 50 cents to make enough hot chocolate to sell 2 cups. You plan to sell the hot chocolate for 50 cents a cup. Calculate your expected profit and the standard deviation of your profit. As in (c), suppose you prepare a fixed amount of hot chocolate, but you are only preparing 1 cup. The cost of this to you is 25 cents. If you plan to sell this cup for 50 cents, calculate your expected profit and the standard deviation of your profit. Note that if the outcome X=2 occurs, this corresponds to a demand of 2 cups, but sales of only 1 cup.

Explanation / Answer

The following table shows the probability function of X = the number of cups of

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