Jason sells medical equipment that is priced at $2 million or more. He has a base...
Jason sells medical equipment that is priced at $2 million or
more. He has a base salary of $40,000 per year. If he sells 5 or
fewer pieces of medical equipment in a year, he gets no commission.
He earns just $40,000. Let M represent the random variable of the
number of pieces of medical equipment he sold in a year. When he
sells 6 or machines in a year, his total pay is determined by the
formula below.
Pay = $40,000 + $30,000 (M-5)2 for M > 6
For example if he sells 7 in one year, Jason is paid
$160,000.
The probability distribution of the number of sales is provided in
the table below
| M | 3 | 4 | 5 | 6 | 7 | 8 |
| Prob. | .1 | .20 | .30 | .20 | .15 | .05 |
a) What is the probability that Jason earns more than $100,000 in a
year?
b) What are the expected value and the variance of his annual
salary?
c) In a year that Jason earned less than $100,000, what is the
probability that his actual salary was $40,000?
d) What is the probability that at least one year in five, he earns
more than $100,000?
e) What is the probability that in 10-year period he earns more
than $800,000?
Homework Answers
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