Posted: March 27th, 2017

a. What is the expected value of the firm s annual profit?

The Electro Corp., which manufactures tv sets, has a fixed cost of $1 million per year. The gross profit form each tv set sold that is, the price less the average variable cost is $20. The expected value of the number of sets the company sells per year is 100,000. The standard deviation of the number of sets sold per year is 10,000.

a. What is the expected value of the firm s annual profit?

b. What is the standard deviation of the firm s annual profit?
c. What is the coefficient of variation of the firm s annual profit?