The Option to Buy Extended Warranties Is Commonplace with Most

question 31

Multiple Choice

The option to buy extended warranties is commonplace with most electronics purchases. But does the type of purchase affect a consumer's willingness to pay extra for
An extended warranty? Data for 420 consumers who purchased digital cameras and
Laptop computers from a leading electronics retailer are summarized in the table. The
Probability that a consumer purchases an extended warranty given that he/she has
Purchased a digital camera is

• A) .07
• B) .42
• C) .58
• D) .17
• E) .83

---

Definitions:

Static Budget

A budget based on a fixed set of assumptions and not adjusted for actual activity levels.

Guest-Days

A measure used in the hospitality industry to quantify the total number of days guest have stayed.

Total Fixed Cost

It encompasses all the expenses that do not change regardless of the business activity volume, such as rent and salaries.

Servicing Materials

Supplies or materials used in the maintenance and repair of products or equipment.