Question

Assume that 10% of published books break even, 20% lose $10,000, 30% lose $20,000, and 40% net $10,000. What is the expected value of a random book?

Answer 1

Let X be the profit per book. E (X) = $[0.1 `xx` 0 + 0.2 `xx` (- 10000) + 0.3 `xx` (- 20000) + 0.4 `xx` 10000] = -$ 4000 `=>` the expected value of a random book is "a loss of 4000 dollars."