Smith will earn a profit of $200 next year if an oil pipeline is built in Nebraska or $60 if it is not built. Jones will earn $20 if the pipeline is built or $120 if it is not built. The probability that the pipeline is built is 0.25 and the probability it is not built is 0.75.

a. Find the expected value of Smith’s profit and the expected value of Jones’s profit.

b. Smith and Jones are considering forming a partnership and dividing the total profits evenly. Find the expected value of each person’s profits.

c. What is the benefit to Smith and Jones of forming a partnership?

a. Find the expected value of Smith’s profit and the expected value of Jones’s profit.

b. Smith and Jones are considering forming a partnership and dividing the total profits evenly. Find the expected value of each person’s profits.

c. What is the benefit to Smith and Jones of forming a partnership?

A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...

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