A Specific Automotive Part That a Service Station Stocks in Its

question 4

Multiple Choice

A specific automotive part that a service station stocks in its inventory has an 8% chance of being defective. Suppose many cars come into the service station needing this
Part each week. What is the expected number of parts retrieved until the first defective?

• A) 8
• B) 12.5
• C) 10.5
• D) 15
• E) 20

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Definitions:

Monopolies

Market structures where a single producer or seller controls the entire supply of a product or service, often leading to reduced competition.

Efficient Level Output

The Efficient Level Output refers to the quantity of production that achieves the highest possible efficiency in terms of cost and resource usage, often where marginal costs equal marginal revenue.

Profit-maximizing Price

The price level at which a business can achieve the highest possible profit, given its production costs and demand for its products.

Break-even

The point at which total cost and total revenue are equal, meaning there is no net loss or gain.