16. The owner of an appliance store is interested in the relation- ship between

Question

16. The owner of an appliance store is interested in the relation- ship between the price at which an item is sold he (regular or sale price) and the customer's decision on whether to purchase and extended warranty. After analyzing her me records, she produced the following joint probabilities: Delete Purchased Did not purchase extended warranty extended warranty ckspace Regular Price 0.21 0.51 0.1 Sale Price A. What is the probability that a customer who bought an Probability item at the regular price purchased the extended warranty? B. What is the probability that a customer buys an extended Probability _ 17. An aerospace company has submitted bids on two warranty? Enter separate federal government defense contracts. The company president believes that there is a 40% probability of winning the first con- tract. If they win the first contract, the probability of winning the second is 65%. However, if they lose the first contract, the pres- ident thinks that the probability of winning the second contract decreases to 49%. Shift End A. What is the probability that they win both contracts? Probability B. What is the probability that they lose both contracts? Probability C. What is the probability that they win only one contract? Probability_

Explanation / Answer

16)

A.

Required probability = P(customer purchased extended warranty | customer bought it at regular price)

= P(customer purchased extended warranty and customer bought it at regular price) / P(customer bought it at regular price)

= 0.21 / (0.21+0.51) = 0.2917

B.

P(customer buys and extended warranty) = P(customer buys and extended warranty and purchases at regular price) + P(customer buys and extended warranty and purchases at sale price)

= 0.21+0.1 = 0.31

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