Interpret the Mean of a Discrete Random Variable as an Expected

question 81

Multiple Choice

Interpret the Mean of a Discrete Random Variable as an Expected Value
-A lab orders a shipment of 100 rats a week, 52 weeks a year, from a rat supplier for experiments that the lab conducts. Prices for each weekly shipment of rats follow the distribution below:
$\begin{array}{l|ccc}\text { Price } & \$ 10.00 & \$ 12.50 & \$ 15.00 \\\hline \text { Probability } & 0.2 & 0.3 & 0.5\end{array}$

How much should the lab budget for next year's rat orders assuming this distribution does not change. (Hint: find the expected price.)

• A) \(\$ 689.00\)
• B) \(\$ 13.25\)
• C) \(\$ 1325.00\)
• D) \(\$ 3,582,800.00\)

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Definitions:

Equilibrium Price

The trading value at which the supply of goods meets the consumers' demand for these goods.

Total Surplus

The sum of consumer and producer surplus, measuring the total net benefit to society from trading a good or service.

Supply

The total amount of a specific good or service that is available to consumers, typically influenced by the price level, production costs, and other factors.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the production and consumption of goods and services.