A. This is not the expected profit when supply equals 4 units. This is the unweighted average of the possible profits when the supply equals 4 units. The expected value is a weighted average, weighted according to the probability of each possible profit occurring.

B. To calculate the expected profit when supply is equal to 4, we need to multiply each of the possible profits at each level of demand by the probability that that demand level will occur and add the results together. This gives us an expected profit of $20 [(-$160 × .1) + (-$40 × .3) + ($80 × .4) + ($80 × .2)].

C. This is not the expected profit when supply equals 4 units. This is the profit when the supply equals 4 units and demand equals 4 or 6 units.

D. This is not the expected profit when supply equals 4 units. This is the total of the possible profits when the supply equals 4 units. The expected value is a weighted average, weighted according to the probability of each possible profit occurring.