What Type of Probability Distribution Will Most Likely Be Used

question 113

Multiple Choice

What type of probability distribution will most likely be used to analyse warranty repair needs on new cars in the following problem? The service manager for a new automobile dealership reviewed dealership records of the past 20 sales of new cars to determine the number of warranty repairs he will be called on to perform in the next 90 days.Corporate reports indicate that the probability any one of their new cars needs a warranty repair in the first 90 days is 0.05.The manager assumes that calls for warranty repair are independent of one another and is interested in predicting the number of warranty repairs he will be called on to perform in the next 90 days for this batch of 20 new cars sold.

• A) Binomial distribution.
• B) Poisson distribution.
• C) Hypergeometric distribution.
• D) None of the above.

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Definitions:

Determinant of Demand

A factor that affects the willingness and ability of consumers to buy a product, which can include price, income, tastes, and expectations.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers equals the quantity supplied by producers, achieving market balance.

Normal Good

A good for which demand increases as consumer income rises, demonstrating a direct relationship between income and demand.

Allocative Efficiency

Achieved when resources are distributed in a way that maximizes the benefits received by society, aligning production with consumer preferences.