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

humm0s

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Feb 28, 2018
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1
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%)
 

tkhunny

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Apr 12, 2005
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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?
 
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