Acme Tire Company makes two models of steel-belted radial tires, Model 1001 and Model 1002. If one of the tires fails and the company is sued, the average settlement is $1,200,000.
a. Find the expected profit for both models of tires after any potential lawsuits. Explain.
b. Would you recommend that the company continue selling both models? Explain.

Model
1001
Blowouts per 200,000 tires
Profits before
$60
any lawsuits

Model
1002
Blowouts per 200,000 tires
-
Profits before any lawsuits