1. ## Probability problem 5

5.43 A rock concert promoter has scheduled an outdoor concert on July 4th. If it does not rain, the promoter will make $30,000. If it does rain, the promoter will lose$15,000 in guarantees made to the band and other expenses. The probability of rain on the 4th is A.

a. What is the promoter's expected profit? Is the expected profit a reasonable decision
criterion?
Explain.

b. How much should an insurance company charge to insure the promoter's full losses?