Lisa Is Trying to Decide on the Location of Her

question 81

Multiple Choice

Lisa is trying to decide on the location of her entrepreneurial venture - Flower Power, a specialty wedding flower service. She has three possible locations (A, B,C) in mind. Lisa has projected that in the first year of operation, under ideal conditions, her company would generate $80,000 at Location A, $55,000 at Location B, and $45,000 at Location C. However, after further analysis, Lisa has determined that there is only a 20 percent chance of ideal conditions occurring during the first year of operation in Location A. Locations B and C have a .4 and a .8 probability, respectively, for ideal conditions during the first year of operations. Based on this information, the expected value for Location A is ________, while for Location B it is ________.

• A) $400,000; $137,500
• B) $16,000; $22,000
• C) $64,000; $33,000
• D) $96,000; $77,000
• E) $320,000; $82,500

---

Definitions:

Value

The importance or utility that something has for an individual or the market price of a good or service.

Horizontal Axis

In graphing, this is the x-axis, which typically represents the independent variable.

Vertical Axis

In a graph or chart, the vertical line or scale along which numerical data is plotted or measured, usually representing quantities.

Straight Line

A direct, shortest path between two points in a plane, often used in mathematics to describe linear functions.