Suppose That a Firm Offers Secret Discounts to 200 Customers

question 14

Short Answer

Suppose that a firm offers secret discounts to 200 customers in a particular industry to attract those customers from a competitor firm.If there is a 2% probability that any one of those customers will disclose the pricing,what is the probability that the firms competitors will hear from one of those 200 customers? Suppose there are instead 20 buyers to which discounts are offered.What is the probability then that the competitors may find out about one of the discounts?

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Definitions:

Income Before Income Taxes

The profit a company has generated before accounting for income tax expenses, often found on the income statement.

Times Interest Earned Ratio

A financial metric that measures a company's ability to cover its interest obligations with its earnings before interest and taxes (EBIT).

Potential Drop

An anticipated decrease in value or performance, often used in the context of stocks or electrical voltage.

Earnings

The profit a company generates during a particular period, often used as a measure of its financial performance.