A new product’s sales and profits are uncertain. The marketing department has predicted that sales might be as high as 9000 units per year with a probability of 15%. The most likely value is 6000 units annually. The pessimistic value is estimated to be 3500 units annually with a probability of 25%. Manufacturing and marketing together have estimated the most likely unit profit to be $33. The pessimistic value of $26 has a probability of 0.25, and the optimistic value of $37 has a probability of 0.3. Construct the probability distributions for sales and unit profits.
A new product’s sales and profits are uncertain. The marketing department has predicted that sales might be as high as 9000 units per year with a probability of 15%. The most likely value is 6000 units annually. The pessimistic value is estimated to be 3500 units annually with a probability of 25%. Manufacturing and marketing together have estimated the most likely unit profit to be $33. The pessimistic value of $26 has a probability of 0.25, and the optimistic value of $37 has a probability of 0.3. Construct the probability distributions for sales and unit profits.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A new product’s sales and profits are uncertain. The marketing department has predicted that sales might be as high as 9000 units per year with a probability of 15%. The most likely value is 6000 units annually. The pessimistic value is estimated to be 3500 units annually with a probability of 25%. Manufacturing and marketing together have estimated the most likely unit profit to be $33. The pessimistic value of $26 has a probability of 0.25, and the optimistic value of $37 has a probability of 0.3. Construct the probability distributions for sales and unit profits.
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