A company that manufactures and sells consumer video cameras sells two versions of their popular hard disk camera, a basic camera for $750, and a deluxe version for $1250. About 75% of customers select the basic camera. Of those, 60% purchase the extended warranty for an additional $200. Of the people who buy the deluxe version, 90% purchase the extended warranty.
a) Sketch the probability tree for total purchases.
b) What is the percentage of customers who buy an extended warranty?
c) What is the expected revenue of the company from a camera purchase (including warranty if applicable)?
d) Given that a customer purchases an extended warranty, what is the probability that he or she bought the deluxe version?

  • CreatedMay 14, 2015
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