7.36 An author has written a book and submitted it to a publisher. The publisher offers to print the book and gives the author the choice between a flat payment of

$10,000 and a royalty plan. Under the royalty plan the author would receive $1 for each copy of the book sold.

The author thinks that the following table gives the probability distribution of the variable x 5 the number of books that will be sold:

Which payment plan should the author choose? Why?

Transcribed Image Text:

x 1000 5000 10,000 p(x) .05 .30 .40 20,000 .25