A construction firm bids on a contract. It anticipates a profit of $50,000 if it gets the contract for the full project, and it estimates a profit of $10,000 on a shared project. The company estimates there's a
15% chance it will get the larger contract and a 80% chance it will get the smaller contract; otherwise, it gets nothing.
(a) Define a random variable to model the outcome of the bid.
(b) What is the expected profit earned on these contracts? Report units with your answer.
(c) What is the standard deviation of the profits?
(a) Choose the correct answer below.
A. Let the random variable x denote the earned profits. Then p(0)=P(x=0)=0.05,p(10,000)=0.15,p(50,000)=0.80.
B. Let the random variable x denote the earned profits. Then p(0)=P(x=0)=0.05,p(10,000)=0.80,p(50,000)=0.15.
C. Let the random variable x denote the outcome of the bid. Then yes
