CA Foundation · Quantitative Aptitude · Probability
The daily profit of Rahul's sweet shop in Indore is ₹2,000 with probability 0.3, ₹3,000 with probability 0.5 and ₹5,000 with probability 0.2. What is the expected daily profit?
The expected daily profit is ₹3,100. It is the probability-weighted sum of the profits: 2000 times 0.3 gives 600, 3000 times 0.5 gives 1500, and 5000 times 0.2 gives 1000, which total 3,100. A simple average would wrongly ignore the probabilities.
- A₹3,333
- B₹3,100Correct
- C₹3,000
- D₹3,500
Explanation
Expected profit = 2000(0.3) + 3000(0.5) + 5000(0.2) = 600 + 1500 + 1000 = ₹3,100. The simple average of the three profits, ₹3,333, is wrong because it ignores the unequal probabilities.
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