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A company makes electronic gadgets. One out of every 50 gadgets is faulty, but the company doesn't know which ones are faulty until a buyer
A company makes electronic gadgets. One out of every 50 gadgets is faulty, but the company doesn't know which ones are faulty until a buyer complains. Suppose the company makes a $3 profit on the sale of any working gadget, but suffers a loss of $80 for every faulty gadget because they have to repair the unit. Can the company expect a profit in the long term? * Yes, they can expect a profit. No, they will lose money in the long term.
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