Question

The probability that a customer will buy a new car and an extended warranty is 0.16. If the probability that a customer will purchase a new car is 0.30, find the probability that the customer will also purchase the extended warranty

Answer 1

Let:

• C indicate when a customer buys a car
• W indicate when a customer buys an extended warranty with their purchase of a car

 

We have:

P(C∩W) = 0.16

      P(C) = 0.30

 

The probability that the customer will also purchase the extended warranty (It implies the customer has purchased the car already):

P(W|C) = P(C∩W)/P(C) 

              = 0.16/0.30 

              ≈ 0.5333

 

Therefore, the probability that the customer will purchase an extended warranty with the purchase of a car is approximately 0.5333.

Therefore, the probability that the customer will purchase an extended warranty with the purchase of a car is approximately 0.5333.