Consider the following to answer the question(s) below:
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.
-The probability that a consumer does not purchase an extended warranty is
A) 0.07.
B) 0.42.
C) 0.58.
D) 0.17.
E) 0.83.

Question

Consider the following to answer the question(s) below:
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. 
-The probability that a consumer does not purchase an extended warranty is
A) 0.07. 
B) 0.42. 
C) 0.58. 
D) 0.17. 
E) 0.83.

Quizplus · Accepted Answer

To find the probability that a consumer does not purchase an extended warranty, we need to add up the number of consumers who did not purchase the warranty and divide by the total number of consumers:

For digital cameras: (120 + 90)/420 = 0.52 
For laptops: (110 + 100)/420 = 0.50

Now we need to find the weighted average of these two probabilities, based on the number of consumers who purchased each item:

(0.52 x 210 + 0.50 x 210)/420 = 0.51

So the probability that a consumer does not purchase an extended warranty is 0.51. Therefore, the best choice is C.

Consider the Following to Answer the Question(s) Below