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Thread: Average Revenue Per Group (fries, milk shakes, and burgers)

  1. #1
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    Average Revenue Per Group (fries, milk shakes, and burgers)

    Hi, I'm currently stuck on a homework question and I was hoping if I could get some help.

    Group A has 50% chance of ordering french fries (price: $5), 40% chance of ordering milkshake (price: $6), and 10% chance of ordering a burger (price: $7) .

    Group B has 30% chance of ordering french fries (price: $5), 30% of chance of ordering a milkshake (price: $6), and 10% chance of ordering a burger (price: $7) .


    What is the average revenue per group?
    Not sure if my work is correct: Avg revenue for Group A: ($5 * 50%) + ($6 * 40%) + ($7 *10%) = $5.6.
    Avg revenue for Group B: ($5 * 30%) + ($6 * 30%) + ($7 *10%)

  2. #2
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    Quote Originally Posted by humm0s View Post
    Hi, I'm currently stuck on a homework question and I was hoping if I could get some help.

    Group A has 50% chance of ordering french fries (price: $5), 40% chance of ordering milkshake (price: $6), and 10% chance of ordering a burger (price: $7) .

    Group B has 30% chance of ordering french fries (price: $5), 30% of chance of ordering a milkshake (price: $6), and 10% chance of ordering a burger (price: $7) .


    What is the average revenue per group?
    Not sure if my work is correct: Avg revenue for Group A: ($5 * 50%) + ($6 * 40%) + ($7 *10%) = $5.6.
    Avg revenue for Group B: ($5 * 30%) + ($6 * 30%) + ($7 *10%)
    You have calculated sum(Each item * probability of each item). That does sound like the definition of Expected Value to me. Good work.

    BTW - Do you think you need to do something with the 30% that is missing from the Group B distribution?
    "Unique Answers Don't Care How You Find Them." - Many may have said it, but I hear it most from me.

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