Suppose 70% of Orders on a Particular Website Are Shipped

question 34

Essay

Suppose 70% of orders on a particular website are shipped to the person who is
making the order and the remaining 30% are shipped to people other than the person
placing the order. Gift wrapping is requested for 60% of the orders being shipped to
other people, but for only 10% of orders shipped to the person making the order.
a) What is the probability that a randomly selected order will be gift wrapped and
sent to a person other than the person making the order?
b) What is the probability that a randomly selected order will be gift wrapped?
c) Is gift-wrapping independent of the destination of the gift? Provide a statistical
justification for your response.

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus how much they actually receive, measured by the area above the supply curve and below the market price.

Government Tax

is a compulsory financial charge imposed by a government on individuals, organizations, or transactions to fund public expenditure.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service relative to its market price, representing the benefit to consumers from participating in the market.

Producer Surplus

The deviation between the selling price producers are content with for a good or service and what they ultimately receive.