The Option to Buy Extended Warranties Is Commonplace with Most

question 24

Short Answer

The option to buy extended warranties is commonplace with most electronics purchases. 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. a. What is the probability that a consumer purchases an extended warranty?
b. What is the probability that a consumer purchases a digital camera and an extended warranty?
c. What is the probability that a consumer purchases an extended warranty given that he/she has purchased a digital camera?

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Definitions:

Assets

Resources owned by a person or business that have economic value and can provide future benefits.

Inventory Turnover Ratio

Indicates how many times a company's inventory is sold and replaced over a certain period, calculated by dividing cost of goods sold by average inventory.

Inventories

Raw materials, work-in-process products, and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale.

Operating Costs

Expenses associated with the day-to-day functions of running a business, excluding capital expenditures.