13. The FLAMES-ARE-US Co. manufactures butane cigarette lighters. Your top-of-the-line lighter, which has the brand name SURE-FLAME,...
Question:
13. The FLAMES-ARE-US Co. manufactures butane cigarette lighters. Your top-of-the-line lighter, which has the brand name "SURE-FLAME," costs $29.95. As a promotional strategy, the SURE-FLAME lighter carries a guarantee that if it takes more than five attempts before the lighter actually lights, then the customer will be given $1,000,000. The terms of the guarantee require that the demonstration of failure of a SURE-FLAME lighter to light within five attempts must be witnessed by an official of the company, and each original buyer of a new SURE-FLAME lighter is allowed only one attempt at being awarded the $1,000,000. The lighter is such that each attempt at lighting the lighter has a probability of success (it lights) equal to .95, and the outcomes of attempts to light the lighter are independent of one another.
Step by Step Answer:
Mathematical Statistics For Economics And Business
ISBN: 9780387945873
1st Edition
Authors: Ron C. Mittelhammer