3.

Let X be the profit (in $1000) from the construction job.

(a) P(lose money) = P(X < 0)

= Area under the PDF where x is negative
= 0.02×10 = 0.2

(b) Given event is X > 0 (i.e. money was made), hence the conditional probability,
P(X > 40 | X > 0)
= P(X > 40 ∩ X > 0) ÷ P(X > 0)
= P(X > 40) ÷ P(X > 0)
Let's first calculate P(X > 40): comparing similar triangles formed by the PDF and the x-axis
(with vertical edges at x = 10 and at x = 40, respectively), we see that
P(X > 40) = Area of smaller triangle
⎛ 70 − 40 ⎞
2
=⎜ ⎟ × Area of larger triangle
⎝ 70 − 10 ⎠
= 0.52 [(70 - 10)×(0.02) ÷ 2] = 0.015

Hence the required probability P(X > 40 | X > 0) is

0.015 ÷ [10×0.02 + (70 - 10)×(0.02) ÷ 2]
= 0.015 ÷ 0.08 = 0.1875