A constructor has to choose between two jobs. The first job promises a profit of rupees 2,40000 with probability of 0.75 or a loss of Rs. 60000 with the probability of 0.25 whereas the second job promises a profit of Rs. 3, 60000 with the probability of 0.50 or a loss of Rs.90,000 with a probability of 0.5.Which job should the contractor choose if he wants to maximise his expected profit.

To maximise expected profit, the constructor should choose the job with the highest expected profit. Upon calculation of expected profits for both jobs, Job 1 yields a higher expected profit, thus is the better choice.

The subject of this problem revolves around the mathematical concept of expected value, which is used in probability theory.

To solve this, we will first calculate the expected profit for each job and then compare them to decide which one the constructor should choose to maximize his expected profit.

The expected value is calculated by multiplying each outcome by its probability of occurrence and adding those results together.

For Job 1, the expected profit is: (0.75*2,40000) - (0.25*60000) = Rs. 165000

For Job 2, the expected profit is: (0.5*3,60000) - (0.5*90000) = Rs. 135000

Since the expected profit for Job 1 is higher than Job 2, it would be the preferable choice if the constructor wants to maximise his expected profit.

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