In the Baldwin Computer Sales case, visited previously in Chapter 3, one of the areas of concern regarding the student purchase program was whether the probability of defaulting on the computer payments might be related to the university attended by the student. Using the BALDWIN data file, first construct an appropriate contingency table of frequencies and determine the overall percentage of students who defaulted on their computer payments.
Then address the following:
1. Given that a student attended university number 1, determine the conditional probability that he or she defaulted on the computer payments.
2. Repeat question 1 for each of the other universities. Do any of the conditional probabilities seem especially high or low compared to the others? In general, which school is associated with those most likely to default, and which school is associated with those least likely to default?
3. If a student is randomly chosen from those who have defaulted on their computer payments, determine the revised probability that the student is from the “most likely to default” university identified in question 2.