A construction firm bids on a contract. It anticipates a profit of +50,000 if it gets the contract for the full project, and it estimates its profit to be +20,000 on a shared project. The firm estimates there’s a 20% chance it will get the full contract and a 75% chance it will get the shared contract; otherwise, it gets nothing.
(a) Define a random variable to model the outcome of the bid for this firm.
(b) What is the expected profit earned on these contracts? Report units with your answer.
(c) What is the standard deviation of the profits?