Suppose you work in a camera store that makes basic and deluxe models. Customers

Question

Suppose you work in a camera store that makes basic and deluxe models. Customers can also purchase an extended warranty for their camera if they choose. 40% of customers purchase the extended warranty, and of these extended warranty purchases, 25% have purchased a basic camera. 70% of customers who purchase a camera purchase a deluxe camera.

a. A customer is purchasing a basic camera, is it worth your time to try and sell the extended warranty?

b. What is the probability that this customer will purchase the extended warranty?

Explanation / Answer

a) yes it is worth to try and sell as 40% of the total customer of extended warranty, 25% are from basic

which is more than 50% hence should be tried for sell

b)probability that will purchase the xtended warranty will be = 0.40*0.25 = 0.10

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