Bach Photographs takes school pictures and charges only $0.99 for a sitting, which consists of six poses. The company then makes up three packages that are offered to the parents, who have a choice of buying 0, 1, 2, or all 3 of the packages. Based on his experience in the business, Bill Bach has assessed the following probabilities of the number of packages that might be purchased by a parent:
No. of Packages xP(x)
0…………………………….0.30
1…………………………….0.40
2…………………………….0.20
3…………………………….0.10
a. What is the expected number of packages to be purchased by each parent?
b. What is the standard deviation for the random variable, x?
c. Suppose all of the picture packages are to be priced at the same level. How much should they be priced if Bach Photographs wants to break even? Assume that the production costs are $3.00 per package. Remember that the sitting charge is $0.99.