David's gasoline station offers 4 cents off per litre if the customer pays in cash and does not use a credit card. Past evidence indicates that 40% of all customers pay in cash. During a one-hour period twenty-five customers buy gasoline at this station.
What is the probability that no more than twenty pay in cash?
A) 0.0
B) 0.1
C) 0.9
D) 1.0
E) None of the choices are correct

Question

Quizplus · Accepted Answer

The problem can be modeled using a binomial distribution with n = 25 and p = 0.4. The probability of 20 or fewer customers paying in cash is very high, close to 1.0, given the parameters.

David's Gasoline Station Offers 4 Cents Off Per Litre If