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A manufacturer of phones realizes a profit of $150 for each telephone sold. However, defective phones can not be sold and cost $300 to produce. Find the expected profit if the probability that a phone is defective is 2%.

Guest Oct 28, 2015

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 #3
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A manufacturer of phones realizes a profit of $150 for each telephone sold. However, defective phones can not be sold and cost $300 to produce. Find the expected profit if the probability that a phone is defective is 2%.

 

Hi Guest, I do not think that your answer is quite right :/

 

Say x phones are produced. 

98% of those are expected to be good so the profit on these will be  0.98*x*$150 = $147x 

BUT

2% will bew no good so these will reduce the profit by 0.02*300*x = $6x

 

So the profit will be  (147-6) x= $141x

 

That is, the expected profit per phone is expected to be  $141

Melody  Oct 28, 2015
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Are you sure this is the only information given?

Guest Oct 28, 2015
 #2
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A manufacturer of phones realizes a profit of $150 for each telephone sold. However, defective phones can not be sold and cost $300 to produce. Find the expected profit if the probability that a phone is defective is 2%.

 

Let x be the number of phones sold, so:

then the profit margin should be:

150x - (.02x X 300),

150x - 6x=144x, therefore the profit margin will be:

144x/150=.96 X 100=96% of the expected $150 price per phone.

Guest Oct 28, 2015
 #3
avatar+90988 
+5
Best Answer

A manufacturer of phones realizes a profit of $150 for each telephone sold. However, defective phones can not be sold and cost $300 to produce. Find the expected profit if the probability that a phone is defective is 2%.

 

Hi Guest, I do not think that your answer is quite right :/

 

Say x phones are produced. 

98% of those are expected to be good so the profit on these will be  0.98*x*$150 = $147x 

BUT

2% will bew no good so these will reduce the profit by 0.02*300*x = $6x

 

So the profit will be  (147-6) x= $141x

 

That is, the expected profit per phone is expected to be  $141

Melody  Oct 28, 2015

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