Answer to Question #327071 in Statistics and Probability for tenz

Question

A company makes electronic gadgets. One out of every 50 gadgets is faulty, but the company doesn't know which ones are faulty until a buyer complains. Suppose the company makes a Php 200 profit on the sale of any working gadget, but suffers a loss of Php 4, 000.00 for every faulty gadget because they have to repair the unit.

Answer 1

$E(X)=200*\frac{49}{50}+(-4000)*\frac{1}{50}=116.$