Blondie and Tootsie (B&T) run a Catering Service. [If you read the comics you should know this.] They have the opportunity to cater a very big fancy wedding in another city. B&T will need to spend $30,000 for food for the wedding guests; in addition they will need 200 hours of time of Helpers (to set up, serve, and clean up) and 100 hours of time of Cooks (to make the food). B&T know that the wage rate for Helpers will be $30/hour but they are unsure of the wage rate for Cooks; it will be either $50/hour or $100/hour.

1. (a)If the wage rate for Cooks is $50/hour, what will be the total cost to B&T? [2pts]
2. (b)If the wage rate for Cooks is $100/hour, what will be the total cost to B&T? [2pts]

B&T estimate the probability that the wage rate for Cooks will be $50/hour is0.8and the probability that the wage rate for Cooks will be $100/hour is0.2.

(c) What will be B&T'sexpectedcost for the job? [4pts]

B&T usually charge clients 110% of their actual cost; so their profit is usually 10% of their actual cost. In this case, B&T have to quote their charge when the contract is signed, so they will charge 110% of theirexpectedcost.

1. (d)How much will B&T charge? [2pts]
2. (e)What will B&T's profit be when the wage rate for Cooks is $50/hr? [2pts]
3. (f)What will B&T's profit be when the wage rate for Cooks is $100/hr? [2pts]
4. (g)If B&T did not have to quote their charge untilafterthey knew their cost, what would their profit be when the wage rate for Cooks is $50/hr? [3pts]
5. (h)If B&T did not have to quote their charge untilafterthey knew their cost, what would their profit be when the wage rate for Cooks is $100/hr? [3pts]