This is an average of the monthly sales in units (both weighted and unweighted). The question asks for the expected value of the additional monthly income. The expected value of the additional monthly income (or loss) is a weighted average of the possible monthly incomes or losses, with the probabilities serving as the weights.
This answer results from calculating the expected value of the additional monthly income (or loss) without using a negative amount for the first amount in the calculation. The $4,000 is a $4,000 loss , and it should be a negative number in the calculation of the expected value.
This is an unweighted average of the possible incomes (losses). The expected value of the additional monthly income (or loss) is a weighted average of the possible monthly incomes or losses, with the probabilities serving as the weights.
The expected value of the additional monthly income (or loss) is a weighted average of the possible monthly incomes or losses, with the probabilities serving as the weights. Thus, the expected value of the additional monthly income (loss) is: (.2 × $[4,000]) + (.3 × $10,000) + (.3 × $30,000) + (.2 × $60,000) = $23,200.
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If Johnson decides to market its new software package, the expected value of the additional monthly income will be