A firm is negotiating with a local club to supply

A firm is negotiating with a local club to supply materials for a party. The firm’s manager expects to sell 100 large bags of pretzels for $3 each or300 for $2 each; these two outcomes are judged to be equally likely. The expected number of bags sold is 200 = (100 + 300) = 2, and expected price is $2.50 = ($3 + $2) = 2. The manager then calculates expected revenue as the expected number sold times the expected price: E (Revenue) = 200 ($2.50) = $500. What is wrong with the manager’s calculation?