Solution-The net contribution can be seen as net

The net contribution can be seen as net contribution

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For a certain product, the net contribution can be seen as Net Contribution = $500,000Q - $200,000, where Q is the market share. The expected market share (E(Q)) is then substituted into the net contribution equation--> E(Net Contribution) = $500,000E(Q) - $200,000.

Why can this be done? In other words, the expected net contribution is the sum of all possible contribution values (ContValue) times their associated probability value--> E(Net Contribution) = SUM(ContValue x P(ContValue)). Thus, the question is why does SUM(ContValue x P(ContValue)) = $500,000E(Q) - $200,000?

Reference no: EM13701533

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The net contribution can be seen as net contribution : For a certain product, the net contribution can be seen as Net Contribution = $500,000Q - $200,000, where Q is the market share. The expected market share (E(Q)) is then substituted into the net contribution equation--> E(Net Contribution) ..

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The net contribution can be seen as net contribution

Reference no: EM13701533

Reference no: EM13701533

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