You are considering a sales job that pays you on a commission basis or

You are considering a sales job that pays you on a commission basis or a salaried position that pays
you $50,000 per year. Historical data suggests the following probability distribution for your
commission income.

Which job has the higher expected income?
Commission
Probability of
Occurrence
$15,000 .15
$35,000 .20
$48,000 .35
$67,000 .22
$80,000 .18
A) The salary of $50,000 is greater than the expected commission of $48,400.
B) The salary of $50,000 is less than the expected commission of $52,720.
C) The salary of $50,000 is less than the expected commission of $50,050.
D) The salary of $50,000 is greater than the expected commission of $49,630.

ANSWER

D