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I am stuck on trying to understand what seems like a simple problem!

"A store manager predicts that his sales for a certain day of the week will be $\$150,000.00$. An independent assessor following the store's day-to-day sales says that the probability of the store's sales for this same day being $>=\$150,000$ is 0.35. Therefore, what is a more reasonable estimate for the store's sales for the day?"

The only thing I could think of was to compute $150000\cdot0.35= 52500$, but I don't know why this should be correct. Any ideas?

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Don't think there is one right answer; just different degrees of reasoning.

I would say you are missing 0.65 probability of making less than 150k. As revenues are positive this means you know this mass lies between 0 and 150k, so call it 75k on average for 0.65 probability.

So I'd add $48,750 to your conservative upside estimate.

So basically 100k average revenues

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  • $\begingroup$ Hi. Thanks for your answer! Could you however please explain, how you came up with "I'd add $48,750 to your conservative upside estimate"? $\endgroup$ – Thomas Moore May 10 '18 at 23:29
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    $\begingroup$ 48,750 is 65% of 75k. I get 75k as the average of the highest (150k) and lowest (0) in the range of positive numbers less than 150k $\endgroup$ – James Spencer-Lavan May 11 '18 at 5:08

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