2. A charity activity organizer has scheduled an outdoor fundraising concert on July 10th. If it...

 

Transcribed Image Text:

2. A charity activity organizer has scheduled an outdoor fundraising concert on July 10th. If it does not rain, the organizer will collect $30,000 from the participants. If it does rain, the organizer will lose $15,000 in guarantees made to the band and other expenses. The probability of rain on July 10th is 40%. a) What is the expected amount of funds that the organizer would make from this concert? b) Based on this expected value, if you are the organizer, would you hold this concert? c) If the probability of rain is now 80%, how would you revise your answer to question (b)? d) The organizer can decide whether to promote and hold this concert based on the weather forecast regarding the probability of rain. If he want to make sure at least he can gain $10,000 from this event, what is the highest probability of rain he can accept to continue with the plan to promote and hold the concert? 2. A charity activity organizer has scheduled an outdoor fundraising concert on July 10th. If it does not rain, the organizer will collect $30,000 from the participants. If it does rain, the organizer will lose $15,000 in guarantees made to the band and other expenses. The probability of rain on July 10th is 40%. a) What is the expected amount of funds that the organizer would make from this concert? b) Based on this expected value, if you are the organizer, would you hold this concert? c) If the probability of rain is now 80%, how would you revise your answer to question (b)? d) The organizer can decide whether to promote and hold this concert based on the weather forecast regarding the probability of rain. If he want to make sure at least he can gain $10,000 from this event, what is the highest probability of rain he can accept to continue with the plan to promote and hold the concert?

Answer rating: 100% (QA)

a To calculate the expected amount of funds that the organizer would make from this concert we need ... View the full answer