Answer:
The answer is "$1.98".
Explanation:
calculating the profit per cake [tex]= \$32 -\$10 =\$22[/tex]
[tex]\text{if demand}=6 , \ lose =\$22 \\\\\text{if demand}= 7,\ lose = \$44\\[/tex]
Calculating E(profit lost):
[tex]=\$22 \times 0.05+ \$44 \times 0.02\\\\ =\$ 1.1+\$ 8.8\\\\=\$ 1.98[/tex]