BPO Services is in the business of digitizing information from forms that are filled out by hand. In 2006, a big client gave BPO a distribution of the forms that it digitized in house last year, and BPO estimated how much it would cost to digitize each form.

Form Type	Mix of Forms	Form Cost
A	0.5	$3.75
B	0.5	$1.25

1. The expected cost of digitizing a form is $____.

Suppose the client and BPO agree to a deal, whereby the client pays BPO to digitize forms. The price of each form processed is equal to the expected cost of the form that you calculated in the previous part of the problem.

Suppose that after the agreement, the client sends only forms of type A.

2. The expected digitization cost per form of the forms sent by the client is $____

3. This leads to an expected loss of $___.

per form for BPO. (Hint: Do not round your answers. Enter the loss as a positive number.)